{"url_path":"/sec/cik-0001883984/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements and Supplementary Data.**","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":36105,"has_tables":true,"body_markdown":"**Item 8. Financial Statements and Supplementary Data.**\n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n**December 31, 2025 and 2024**\n\n \n\n \n**Page**\n\n \n[67](#audit)\n\n[Report of Independent Registered Public Accounting Firm (Kreit & Chiu CPA LLP, PCAOB ID 6651)](#audit2)\n\n[F-2](#audit2)\n\n[Consolidated Balance Sheets as of December 31, 2025 and 2024.](#bs)\n\n[F-3](#bs)\n\n[Consolidated Statements of Operations and Other Comprehensive Income/(Loss) for the Years ended December 31, 2025 and 2024](#income)\n\n[F-4](#income)\n\n[Consolidated Statements of Changes in Shareholders’ Equity/(Deficit) for the Years ended December 31, 2025 and 2024](#she)\n\n[F-5](#she)\n\n[Consolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024](#cfs)\n\n[F-6](#cfs) – [F-7](#suppcashflows)\n\n[Notes to Consolidated Financial Statements](#notes)\n\n[F-8](#notes) – [F-46](#notesend)\n\n \n\n \n\nF-1\n\n[Table of Contents](#toc)\n\n \n\n \n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\n \n\nBoard of Directors and Shareholders\n\nAlternus Clean Energy, Inc.\n\n \n\n**Opinion** **on** **the** **Financial** **Statements**\n\n \n\nWe have audited the accompanying consolidated balance sheets of Alternus Clean Energy, Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2025, and 2024, and the related consolidated statements of operations and other comprehensive income/(loss), changes in shareholders’ equity/(deficit), and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024, the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.\n\n \n\n**Explanatory** **Paragraph** – **Going** **Concern**\n\n \n\nThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered continued negative cash flows and losses from continuing operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\n \n\n**Basis** **for** **Opinion**\n\n \n\nThese financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (\"PCAOB\") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n \n\n/s/ Kreit & Chiu CPA LLP\n\n \n\nWe have served as the Company's auditor since 2024. Los Angeles, California\n\n \n\nJune 12, 2026\n\n \n\nF-2\n\n[Table of Contents](#toc)\n\n \n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED BALANCE SHEETS**\n\n**(in thousands, except share and per share data)**\n\n \n\n  \n**As of**\n  \n**As of**\n \n\n  \n**December 31,**\n  \n**December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n**ASSETS**\n   ** **   ** **\n\n**Current Assets**\n   ** **   ** **\n\nCash and cash equivalents\n $32  $161 \n\nPrepaid expenses and other current assets\n  -   131 \n\nTaxes recoverable\n  12   347 \n\n**Total Current Assets**\n  **44**   **639** \n\n         \n\nCapitalized development costs\n  -   4,775 \n\nIntangible assets, net\n  37,518   1,554 \n\nGoodwill\n  18,964   241 \n\nLong-term prepaid expenses\n  518   518 \n\n**Total Assets**\n $**57,044**  $**7,727** \n\n         \n\n**LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)**\n   ** **   ** **\n\n**Current Liabilities**\n   ** **   ** **\n\nAccounts payable. (of which $2,712 payable to related parties)\n $6,621  $9,799 \n\nAccrued liabilities\n  3,779   2,371 \n\nTaxes payable\n  -   14 \n\nOperating lease liability\n  -   28 \n\nShort term convertible and non-convertible promissory notes, net of debt issuance costs\n  6,161   24,851 \n\nConvertible note measured at fair value\n  9,900   1,702 \n\nWarrant liability\n  -   811 \n\nOther liabilities (of which $1,420 payable to related party)\n  7,561   - \n\n**Total Current Liabilities**\n  **34,022**   **39,576** \n\n         \n\nLong term convertible and non-convertible promissory notes, net of debt issuance costs\n  -   1,629 \n\nOperating lease liability, net of current portion\n  -   407 \n\n**Total Liabilities**\n  **34,022**   **41,612** \n\n         \n\n**Shareholders' Equity / (Deficit)**\n   ** **   ** **\n\nSeries A Preferred stock, $0.0001 par value, 60,000 authorized as of December 31, 2025 and December 31, 2024. 60,000 issued and outstanding as of December 31, 2025 and 0 as at December 31, 2024.\n  60   - \n\nSeries B Convertible Preferred stock, $0.0001 par value, 21,150 authorized as of December 31, 2025 and December 31, 2024. 21,150 issued and outstanding as of December 31, 2025 and 0 as at December 31, 2024.\n  42,920   - \n\nSeries C Convertible Preferred stock, $0.0001 par value, 12,000 authorized as of December 31, 2025 and December 31, 2024. 3,150 issued and outstanding as of December 31, 2025 and 0 as at December 31, 2024.\n  2,831   - \n\nCommon stock, $0.0001 par value, 2 billoin authorized as of December 31, 2025 and 300 million authorized as of December 31, 2024; 724,658 issued and outstanding as of December 31, 2025 and 25,189 issued and outstanding as of December 31, 2024.\n  -   - \n\nAdditional paid in capital\n  33,712   35,927 \n\nForeign currency translation reserve\n  (2,473)  (2,679)\n\nAccumulated deficit\n  (73,619)  (67,133)\n\nShareholders’ Equity / (Deficit) attributable to Alternus Clean Energy Inc.\n  3,431   (33,885)\n\nNoncontrolling interest\n  19,591   - \n\n**Total Shareholders' Equity / (Deficit)**\n  **23,022**** **  **(33,885****)**\n\n**Total Liabilities and Shareholders' Equity / (Deficit)**\n $**57,044**  $**7,727** \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-3\n\n[Table of Contents](#toc)\n\n \n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)**\n\n**(in thousands, except share and per share data)**\n\n \n\n  \n**Year Ended December 31**\n \n\n  \n**2025**\n  \n**2024**\n \n\n         \n\n**Revenues**\n $-  $311 \n\n         \n\n**Operating Expenses**\n   ** **   ** **\n\nCost of revenues\n  -   (364)\n\nSelling, general, and administrative\n  (8,065)  (11,984)\n\nDepreciation, amortization, and accretion\n  (593)  (215)\n\nDevelopment costs\n  -   (748)\n\nImpairment of Spanish assets\n  -   (3,263)\n\nGain on disposal of assets\n  15,513   - \n\n**Total operating expenses**\n  6,855   (16,574)\n\n         \n\n**Income/(Loss) from operations**\n  6,855   (16,263)\n\n         \n\n**Other income/(expense):**\n   ** **   ** **\n\nInterest expense\n $(4,198) $(8,774)\n\nFair value movement of FPA asset\n  -   (483)\n\nFair value movement of convertible note\n  (3,967)  67 \n\nDebt restructuring costs\n  (753)  - \n\nCosts associated with legal actions related to unpaid liabilities\n  (1,232)  - \n\nFair value movement of warrant\n  1,564   565 \n\nLoss on issuance of debt\n  (35)  (520)\n\nLoss on extinguishment of debt\n  (3,187)  179 \n\nGain on settlement of liabilities\n  596   - \n\nLoss on settlement of SAA with Hover\n  (2,025)  - \n\nProvision for loss from related party\n  (561)   \n\nOther expense\n  (363)  (506)\n\nOther income\n  -   1,571 \n\nTotal other expenses\n  (14,161)  (7,901)\n\nLoss before provision for income taxes\n  (7,306)  (24,164)\n\nIncome taxes\n  -   (590)\n\n**Loss from continuing operations**\n $**(7,306****)** $**(24,754****)**\n\n         \n\n**Discontinued operations:**\n   ** **   ** **\n\nLoss from operations of discontinued business components\n  -   (7,543)\n\nGain on sale of discontinued operations, net assets\n  -   53,462 \n\nIncome tax\n  -   (87)\n\nIncome/(loss) from discontinued operations\n  -   45,832 \n\n**Net income/(loss)**\n $**(7,306**) $**21,078**** **\n\nNet income/(loss) attributable to noncontrolling interest\n  (820)  - \n\nNet income/(loss) attributable to Alternus\n  (6,486)  21,078 \n\nDeemed dividend to preferred shareholder\n  (10,643)  - \n\nNet income/(loss) attributable to common stock\n $(17,128) $21,078 \n\n         \n\n**Basic & diluted loss per share of common stock:**\n   ** **   ** **\n\nContinuing operations\n $(35.71) $(1,402.00)\n\nDiscontinued operations\n  -   2,596.00 \n\n**Total earnings/(loss) per share of common stock, basic & diluted**\n $**(35.71**) $**1,194.00**** **\n\nWeighted-average common stock outstanding, basic & diluted\n  479,613   17,653 \n\nComprehensive income/(loss):\n        \n\nNet income/(loss)\n $(7,306) $21,078 \n\nForeign currency translation adjustment\n  206   245 \n\n**Comprehensive income/(loss)**\n $**(7,100**) $**21,323**** **\n\nComprehensive income/(loss) attributable to noncontrolling interest\n $(820) $- \n\nComprehensive income/(loss) attributable to Alternus\n $(6,280) $21,323 \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-4\n\n[Table of Contents](#toc)\n\n \n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS**’** EQUITY/(DEFICIT)**\n\n**(in thousands, except share amounts)**\n\n \n\n   * *** **  * *** **  * *** **  * *** **  * *** ** \n**Foreign**\n   * *** ** \n**Shareholders**\n   * *** **  * *** **\n\n   * *** **  * *** **  * *** **  * *** ** \n**Additional**\n  \n**Currency**\n   * *** ** \n**Equity / (Deficit)**\n   * *** ** \n**Total**\n \n\n  \n**Preferred Stock**\n  \n**Common Stock**\n  \n**Paid-In**\n  \n**Translation**\n  \n**Accumulated**\n  \n**Attributable**\n  \n**Noncontrolling**\n  \n**Shareholders’**\n \n\n  \n**Shares**\n  \n**Amount**\n  \n**Shares**\n  \n**Amount**\n  \n**Capital**\n  \n**Reserve**\n  \n**Deficit**\n  \n**to Parent**\n  \n**Interest**\n  \n**Equity / (Deficit)**\n \n\n**Balance at January 1, 2024**\n  **-**  $**-**   **14,381**  $**-**  $**27,881**  $**(2,924****)** $**(88,211****)** $**(63,254****)** $**-**  $**(63,254****)**\n\nSettlement of Related Party Debt for Shares\n  -   -   2,713   -   9,841   -   -   9,841      9,841 \n\nConversion of Debt\n  -   -   5,623   -   2,941   -   -   2,941      2,941 \n\nMerger Costs – Settlement of Related Party Debt and Conversion of Debt\n  *-*   -   *-*   -   (10,633)  -   -   (10,633)     (10,633)\n\nStock Compensation for Third Party Services\n  -   -   222   -   321   -   -   321      321 \n\nShares Issued for Joint Venture Agreement\n  -   -   1,000   -   1,191   -   -   1,191      1,191 \n\nEffects of Reverse Stock Split\n  -   *-*   (0)  *-*   *-*   *-*   *-*   *-*   * *   *-* \n\nShares Issuable from LiiON Acquisition\n  -   -   1,250   -   288   -   -   288      288 \n\nDeconsolidation of Entities to Parent Company\n  *-*   -   *-*   -   13,862   -   -   13,862      13,862 \n\nTransfer of Debt from Parent Company\n  *-*   -   *-*   -   (9,765)  -   -   (9,765)     (9,765)\n\nForeign currency translation adjustment – continuing operations\n  *-*   -   *-*   -   -   245   -   245      245 \n\nNet income - discontinued operations\n  *-*   -   *-*   -   -   -   45,832   45,832      45,832 \n\nNet loss - continuing operations\n  *-*   -   *-*   -   -   -   (24,754)  (24,754)     (24,754)\n\n**Balance at December 31, 2024**\n  **-**  $**-**   **25,189**  $**-**  $**35,927**  $**(2,679****)** $**(67,133****)** $**(33,885****)** $**-**  $**(33,885****)**\n\nConversion of Debt\n  -   -   140,791   -   2,336   -   -   2,336      2,336 \n\nSettlement of Payables for Shares\n  -   -   3,239   -   467   -   -   467      467 \n\nDebt Issuance Costs\n  -   -   38,880   -   813   -   -   813      813 \n\nStock compensation\n  -   -   262,500   -   2,100   -   -   2,100      2,100 \n\nShares issued to AEG and AEG related\n  -   -   201,600   -   1,418   -   -   1,418      1,418 \n\nShares issued to 3rd parties for Services\n  -   -   53,750   -   443   -   -   443      443 \n\nShares returned on recission of Liion\n  -   -   (1,250)  -   (10)  -   -   (10)     (10)\n\nIssuance of Series A Preferred shares to Officer\n  60,000   60   -   -   -   -   -   60      60 \n\nDeemed issuance for EverOn transaction\n  *-*   -   *-*   -   860   -   -   860      860 \n\nIssuance of Preferred B Shares for EverOn transaction\n  20,000   30,525   -   -   -   -   -   30,525   19,591   50,116 \n\nIssuance of Preferred B Shares for settlemnt of SAA with Hover\n  1,150   1,753   -   -   -   -   -   1,753      1,753 \n\nIssuance of Preferred C Shares for settlement of debt\n  3,150   2,831   -   -   -   -   -   2,831   * *   2,831 \n\nPreferred stock dividend\n  *-*   10,642   *-*   -   (10,643)  -   -   (0)     (0)\n\nFractional shares rounddown from reverse split\n  -   *-*   (41)  *-*   *-*   *-*   *-*   *-*   * *   *-* \n\nForeign currency translation adjustment\n  *-*   -   *-*   -   -   206   -   206      206 \n\nNet loss\n  *-*   -   *-*   -   -   -   (6,486)  (6,486)     (6,486)\n\n**Balance at December 31, 2025**\n  **84,300**  $**45,811**   **724,658**  $**-**  $**33,712**  $**(2,473****)** $**(73,619****)** $**3,431**  $**19,591**  $**23,022** \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-5\n\n[Table of Contents](#toc)\n\n \n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n**(in thousands, except share and per share data)**\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n**Cash Flows from Operating Activities**\n   ** **   ** **\n\nNet income/(loss)\n $(6,486) $21,078 \n\nLoss attributable to noncontrolling interest\n $(820) $- \n\nIncome/(loss) from discontinued operations, net of tax\n  -   45,832 \n\nLoss from continuing operations\n $(7,306) $(24,754)\n\n*Adjustments to reconcile loss from continuing operations to net cash provided by/(used in) operations:*\n   * *   * *\n\nDepreciation and accretion\n  593   215 \n\nAmortization of debt discount\n  2,022   891 \n\nDevelopment costs\n  -   748 \n\nDebt issuance cost of convertible debt\n  -   1,641 \n\nGain (loss) on foreign currency exchange rates\n  228   (700)\n\nStock compensation costs\n  2,160   - \n\nShare-based compensation to third parties\n  213   321 \n\nFair value movement of convertible debt\n  3,967   (67)\n\nDebt Restructuring Costs\n  753   - \n\nFair value movement of warrant liability\n  (1,564)  (565)\n\nFair value movement of FPA asset\n  -   483 \n\nLoss on issuance of debt\n  35   520 \n\nCosts associated with legal actions for liabilities\n  1,232   - \n\nNet gain on settlement of liabilities\n  (596)  - \n\nLoss on extinguishment of debt\n  3,187   - \n\nGain on extinguishment of debt\n  -   (179)\n\nImpairment of asset\n  -   3,263 \n\nImpairment for amounts due from related party\n  561   - \n\nLoss on settlement of SAA with Hover\n  2,025   - \n\nOther Expenses\n  131   - \n\nGain on disposal of assets\n  (15,513)  1,301 \n\nNon-cash operating lease assets\n  -   35 \n\n*Changes in assets and liabilities, net of effects of acquisitions:*\n   * *   * *\n\nAccounts receivable and other short-term receivables\n  -   (28)\n\nPrepaid expenses and other assets\n  -   1,029 \n\nAccounts payable\n  1,223   12,794 \n\nAccrued liabilities\n  3,057   (109)\n\nPayable to/from related party\n  1,107   - \n\nOperating lease liabilities\n  -   (61)\n\n**Net Cash (used in) Operating Activities**\n $**(2,485****)** $**(3,222**)\n\n**Net Cash provided by Operating Activities - Discontinued Operations**\n  **-**   **95,592** \n\n         \n\n**Cash Flows from Investing Activities:**\n   ** **   ** **\n\nPurchases of property and equipment\n  -   (1,485)\n\nSales of property and equipment\n  -   - \n\nCapitalized Cost\n  -   - \n\nConstruction in Process\n  -   (194)\n\n**Net Cash (used in) Investing Activities**\n $**-**** ** $**(1,679****)**\n\n**Net Cash provided by Investing Activities - Discontinued Operations**\n  **-**   **23,088**** **\n\n         \n\n**Cash Flows from Financing Activities:**\n   ** **   ** **\n\nProceeds from debt\n  2,377   6,782 \n\nPayments of debt principal\n  (21)  (5,599)\n\n**Net Cash provided by Financing Activities**\n $**2,356**  $**1,183** \n\n**Net Cash (used in) Financing Activities - Discontinued Operations**\n  **-**** **  **(137,729****)**\n\n         \n\nEffect of exchange rate on cash\n  -   (1,636)\n\n**Net increase/(decrease) in cash**\n $**(129****)** $**(24,403**)\n\nCash beginning of the year\n  161   24,564 \n\n**Cash end of the year**\n $**32**  $**161** \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-6\n\n[Table of Contents](#toc)\n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**CONSOLIDATED SUPPLEMENTAL STATEMENTS OF CASH FLOW**\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n**Supplemental Cash Flow Disclosure**\n   ** **   ** **\n\nCash paid during the period for:\n        \n\nInterest (net of capitalized interest of $2,792 and $397 respectively)\n $-  $6,099 \n\nTaxes\n  -   - \n\nNon-cash investing and financing activities:\n        \n\nShares issued for conversion of debt\n  2,337   2,940 \n\nShares issued in settlement of debt and other liabilities\n  467   9,840 \n\nShares issued for stock compensation to third parties\n  443   321 \n\nFair value of Series B Convertible Preferred shares issued for settlement of SAA\n  1,755   - \n\nFair value of Series C Convertible Preferred shares issued for settlement of liabilities\n  2,831   - \n\nDebt assumed from related party\n  250   - \n\nShares issued to related party\n  1,418   - \n\nShares issued for joint venture\n  -   1,190 \n\nShares issuable for LiiON acquisition\n  -   288 \n\nPromissory note issued for LiiON acquisition\n  -   1,537 \n\n         \n\nDisposal of MH02 & Italian SPV's\n        \n\nCash\n  47   * * \n\nNet Taxes Recoverable\n  347   * * \n\nDue from / to related parties\n  (18)  * * \n\nCapitalized costs\n  3,815   * * \n\nAccounts payable\n  (150)  * * \n\nAccrued liabilities\n  (544)  * * \n\nTaxes payable\n  (13)  * * \n\nNon-Convertible Debt, Short Term\n  (15,994)  * * \n\nGain (loss) on foreign currency exchange rates\n  546   * * \n\n**(Gain) on disposal**\n  **(11,965****)**  * *** **\n\n         \n\nDisposal of Spanih assets\n        \n\nDue from/to related parties\n  18   * * \n\nAccounts payable\n  (196)  * * \n\nAccrued liabilities\n  (195)  * * \n\nOperating Leases Short Term\n  (29)  * * \n\nTaxes payable\n  (1)  * * \n\nNon-Convertible Debt, Short Term\n  (2,773)  * * \n\nCapital Leases, Long Term\n  (407)  * * \n\n**(Gain) on disposal**\n  **(3,582****)**  * *** **\n\n         \n\nRecission of Liion Transsaction\n        \n\nIntangible assets\n  1,665   * * \n\nAccounts payable\n  (70)  * * \n\nNon-Convertible Debt, Short Term , net of debt discount\n  (433)  * * \n\nNon-Convertible Debt, Long Term\n  (1,129)  * * \n\n**Loss on transaction**\n  **34**   * *** **\n\n         \n\nAcquisition of EverOn Intangible assets and goodwill for Preffered equity and non monetary assets\n        \n\nFair value of noncontrolling interest contributed for 49% of EverOn\n  20,411   * * \n\nFair value of 20,000 Series B Convertible Preferred Shares\n  30,523   * * \n\nOASIS system contributed as Additional paid in capital\n  860   * * \n\nCapitalized costs contributed\n  5,150   * * \n\n**Total consideration**\n  **56,944**   * *** **\n\n \n\n \n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-7\n\n[Table of Contents](#toc)\n\n \n\n**ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n \n\n**1.**\n\n**Organization and Formation**\n\n \n\nAlternus Clean Energy, Inc. (the “Company”) was incorporated in Delaware on *May 14, 2021*and was originally known as Clean Earth Acquisitions Corp. (“Clean Earth”).\n\n \n\nOn *October 12, 2022,*Clean Earth entered into a Business Combination Agreement, as amended by that certain First Amendment to the Business Combination Agreement, dated as of *April 12, 2023 (*the “First BCA Amendment”) (as amended by the First BCA Amendment, the “Initial Business Combination Agreement”), and as amended and restated by that certain Amended and Restated Business Combination Agreement, dated as of *December 22, 2023 (*the “A&R BCA”) (the Initial Business Combination Agreement, as amended and restated by the A&R BCA, the “Business Combination Agreement”), by and among Clean Earth, Alternus Energy Group Plc (“AEG”) and the Sponsor. Following the approval of the Initial Business Combination Agreement and the transactions contemplated thereby at the special meeting of the stockholders of Clean Earth held on *December 4, 2023,*the Company consummated the Business Combination on *December 22, 2023.*In accordance with the Business Combination Agreement, Clean Earth issued and transferred 2,300,000 shares of common stock of Clean Earth, par value $0.0001 per share, to AEG, and AEG transferred to Clean Earth, and Clean Earth received from AEG, all of the issued and outstanding equity interests in the Acquired Subsidiaries (as defined in the Business Combination Agreement) (the “Equity Exchange,” and together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). In connection with the Closing, the Company changed its name from Clean Earth Acquisition Corp. to Alternus Clean Energy, Inc.\n\n \n\nClean Earth’s (SPAC) only pre-combination assets were cash and investments and the SPAC did *not* meet the definition of a business in accordance with US GAAP. Therefore, the substance of the transaction was a recapitalization of the target (AEG) rather than a business combination or an asset acquisition. In such a situation, the transaction is accounted for as though the target issued its equity for the net assets of the SPAC and, since a business combination has *not* occurred, *no* goodwill or intangible assets would be recorded. As such, AEG is considered the accounting acquirer and these consolidated financial statements represent a continuation of AEG’s financial statements. Assets and liabilities of AEG are presented at their historical carrying values.\n\n \n\nAlternus Clean Energy Inc. is a holding company that operates through the following *eight* operating subsidiaries as of *December 31, 2025*:\n\n \n\n  \n**Principal**\n \n**Date Acquired /**\n   \n**Country of**\n\n**Subsidiary**\n \n**Activity**\n \n**Established**\n \n**ALTN Ownership**\n \n**Operations**\n\nAlternus Europe Limited f/k/a AEG JD *03* Limited\n \nHolding Company\n \n*21* *March 2022*\n \nAlternus Lux *01* S.a.r.l.\n \nIreland\n\nAlternus LUX *01* S.a.r.l.\n \nHolding Company\n \n*5* *October 2022*\n \nAlternus Clean Energy, Inc.\n \nLuxembourg\n\nAlt Alliance LLC\n \nHolding Company\n \n*September 2023*\n \nAlternus Clean Energy, Inc.\n \nUSA\n\nAEG MH *04* Limited\n \nHolding Company\n \n*16* *January 2024*\n \nAlternus Lux *01* S.a.r.l.\n \nIreland\n\nALT POL HC *02* sp. z.o.o.\n \nHolding Company\n \n*20* *January 2023*\n \nAlternus Europe Limited\n \nPoland\n\nALANTEAN LLC\n \nJoint Venture\n \n*10* *April 2024*\n \nAlt Alliance LLC\n \nUSA\n\nBESS LLC\n \nHolding Company\n \n*10* *December 2024*\n \nAlternus Clean Energy, Inc.\n \nUSA\n\nEverOn Energy LLC\n \nJoint Venture\n \n*24* *March 2025*\n \nAlt Alliance LLC (*51%*)\n \nUSA\n\n \n\nThe Company's primary commercial vehicle is EverOn Energy LLC (\"EverOn\"), a joint venture formed with Hover Energy LLC, through which it develops and operates Wind Powered Microgrids™ for blue-chip corporate 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. See Footnote *6* for more details on EverOn.\n\n \n\n**2.**\n\n**Going Concern and Management**’**s Plans**\n\n \n\nThe Company’s consolidated financial statements for the year ended *December 31, 2025*identify the existence of certain conditions that raise substantial doubt about the Company’s ability to continue as a going concern for a period of *twelve* months from the issuance of these financial statements.\n\n \n\nThe accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements for the period ended *December 31, 2025,*the Company has incurred losses from continuing operations of ($7.3) million and ($24.8) million for the years ended *December 31, 2025*and *2024,* respectively, and has an accumulated deficit of ($73.6) million as of *December 31, 2025.*In addition, the Company has generated negative operating cash flows and has limited cash resources available to fund operations. \n\n \n\nAdditionally, the Company currently has *no* operating revenues and its assets are already pledged to secure indebtedness to various *third* party secured creditors. Without additional financing, the Company could be required to delay, scale back, or terminate its business activities, which would have a material adverse effect on the Company and its viability and prospects.\n\n \n\nThe terms of the Company’s indebtedness, including the covenants and the dates on which principal and interest payments on indebtedness become due, increase the risk that the Company will be unable to continue as a going concern. To continue as a going concern over the next *twelve* months, the Company must make payments on its debt as they come due and comply with the covenants in the agreements governing our indebtedness or, if it fails to do so, to (i) negotiate and obtain waivers of or forbearances with respect to any defaults that occur with respect to  indebtedness, (ii) amend, replace, refinance, or restructure any or all of the agreements governing the Company’s indebtedness, and/or (iii) otherwise secure additional capital. However, the Company cannot provide any assurances that it will be successful in accomplishing any of these plans.\n\n \n\nThe Company’s Common Stock is currently quoted on an over-the-counter trading market.\n\n \n\nBased upon the Company's current operating plan and forecasted expenditures, without  the successful execution of management’s plans (described below) management believes that existing cash resources will *not* be sufficient to fund operations for the *twelve*-month period following the issuance of these financial statements. Accordingly, substantial doubt exists regarding the Company's ability to continue as a going concern.\n\n \n\nF-\n*8*\n\n[Table of Contents](#toc)\n\n \n\n*Management's Plans*\n\n \n\nManagement has entered into a term sheet with institutional investors providing for *two* tranches of preferred equity financing totaling $20.0 million before transaction costs. Funding of each tranche remains subject to various conditions precedent, including receipt of certain governmental and regulatory approvals that are outside the Company's control.\n\n \n\nIn addition, the Company is in the process of negotiating a preliminary term sheet for an equity line of credit (“ELOC”) facility providing for up to $50.0 million of 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, the Company’s ability to access capital under the facility will 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\nBecause the completion and ultimate timing of these transactions remain dependent upon matters that are *not* entirely within the Company's control, management has concluded that its plans do *not* alleviate the substantial doubt regarding the Company's ability to continue as a going concern.\n\n.\n\n \n\n**3.**\n\n**Summary of Significant Accounting Policies**\n\n \n\n****\n\n**Basis of Presentation**\n\n \n\nThe Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).\n\n \n\n****\n\n**Basis of Consolidation** \n\n \n\nThe consolidated financial statements include the financial statements of the Company, its wholly owned and majority-owned subsidiaries and entities consolidated as variable interest entities (\"VIEs\") for which the Company has been determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated financial statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.\n\n \n\n \n\n****\n\n**Variable 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\n****\n\n**Related Party Transactions**\n\n \n\nA Related Party transaction is any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which (i) the Company or any of its subsidiaries is or will be a participant, and (ii) any Related Party has or will have a direct or indirect interest. A Related Party is any person who is or was (since the beginning of the last fiscal year even if such person does *not* presently serve in that role) an executive officer or director of the Company, any shareholder owning more than *5%* of any class of the Company’s voting securities, or an immediate family member of any such person. Refer to Footnote *25* for more details.\n\n \n\n****\n\n**Use of Estimates**\n\n \n\nThe preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Significant items subject to such estimates include, but are *not* limited to, the assumptions utilized in the valuation of the assets acquired and liabilities assumed, determination of a business combination or asset acquisition, impairment of long-lived assets, measurement of level *3* fair value assets, and recovery of capitalized cost. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. These estimates are based on information available as of the date of financial statements; therefore, actual results could differ from these estimates.\n\n \n\n \n\n \n\nF-\n*9*\n\n[Table of Contents](#toc)\n\n \n\n****\n\n**Reclassification of Prior Period Cash Flows**\n\n \n\nOn *October 3, 2024,*the Company completed the sale of Solis Bond Company DAC and its subsidiaries in Romania, which met the criteria for classification as a discontinued operation under ASC *205*-*20.* Consequently, the results of Solis and its Romanian subsidiaries have been presented as discontinued operations in the consolidated financial statements for the period ended *December 31, 2024.*As a result, the consolidated statements of cash flows for the year ended *December 31, 2024*, have been recast to segregate cash flows from discontinued operations. These reclassifications had *no* impact on previously reported net cash flows. The following table summarizes the cash flows attributable to discontinued operations (in thousands):\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Discontinued Operations**\n \n**2025**\n  \n**2024**\n \n\nNet cash provided by/(used in) operating activities\n $-  $95,592 \n\nNet cash provided by/(used in) investing activities\n  -   23,088 \n\nNet cash provided by/(used in) financing activities\n  -   (137,729)\n\n \n\n****\n\n**Accounts Receivable**\n\n \n\nAccounts receivable are uncollateralized amounts due from customers under normal trade terms. Accounts receivables are presented net of allowance for doubtful accounts. The Company establishes an allowance for doubtful customer accounts, through a review of historical losses, customer balances, and industry economic conditions. Under the expected loss model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that *may*lead to a loss being realized, regardless of whether it is probable that the future event will occur. The Company extends credit based on an evaluation of customers’ financial condition and determines any additional collateral requirements. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company considers invoices past due when they are outstanding longer than the stated term. Under the expected loss model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that *may*lead to a loss being realized, regardless of whether it is probable that the future event will occur. Management considers the carrying value of accounts receivable to be fully collectible. If amounts become uncollectible, they are charged to operations in the period in which that determination is made.\n\n \n\nThe allowance for credit losses was $0 as of *December 31, 2025*and *2024*, respectively.\n\n \n\n****\n\n**Concentration of Credit Risk**\n\n \n\nAt times, the Company maintains cash balances in financial institutions which *may*exceed federally insured limits. The Company maintains cash balances in all countries in which it operates and in Ireland where the Company is headquartered. Government coverage for the Company’s cash balances are as follows:\n\n \n\n \n●\n\nEuropean Union - $117,630 (€100,000) per account is covered for operations in Romania, Poland, Italy, and the Company’s headquarters in Ireland.\n\n \n●\n\nUnited States - $250,000\n\n \n\nWhile the company did *not* have any cash accounts above the government insurance amounts as of *December 31, 2025*, it did at times have balances above the insurance amount throughout the year. The Company has *not* experienced any losses relating to such accounts and believes it is *not* exposed to significant credit risk on its cash and cash equivalents or restricted cash.\n\n \n\n**Economic Concentrations**\n\n \n\nDuring the year ended *December 31, 2024,*the Company and its subsidiaries owned and operated solar generating facilities installed on buildings and land located across Europe and the United States. Future operations could be affected by changes in the economy, other conditions in those geographic areas, or by changes in the demand for renewable energy.\n\n \n\n****\n\n**Property and Equipment**\n\n \n\nProperty and equipment are stated at cost less accumulated depreciation, amortization, and impairment. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use. Depreciation is computed on a straight-line basis over the estimated useful lives. The useful lives per asset class are as follows:\n\n \n\n \n●\n\nSolar Energy Facilities carry a useful life of the lesser of 35 years from the original placed in-service date or the lease term of the land on which they are built.\n\n \n\n \n●\n\nLeasehold improvements are amortized over the shorter of the lease term or their estimated useful life.\n\n \n\n \n●\n\nFurniture and fixtures carry a useful life of 3 years.\n\n \n\n \n●\n\nSoftware and computer equipment carry a useful life of 3 and 5 years respectively.\n\n \n\nF-\n*10*\n\n[Table of Contents](#toc)\n\n \n\nExpenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. Expenditures for maintenance and repairs, which do *not* materially extend the useful lives of assets, are charged to expense as incurred. Upon retirement, sale, or other disposition of equipment, the cost and accumulated depreciation are removed from the respective accounts and a gain or loss, if any, is recognized on the Consolidated Statements of Operations and Comprehensive Income/(Loss) during the year of disposal. When the Company abandons the anticipated construction of a new solar energy facility during the development phase, costs previously capitalized on the Consolidated Balance Sheet are written off to the Consolidated Statements of Operations and Comprehensive Income/(Loss).\n\n \n\n****\n\n**Capitalized Development Costs and Impairment Policy **\n\n \n\nThe Company capitalizes development costs directly attributable to the design, development and construction of clean energy facilities, such as solar farms, customer-based microgrid projects, and battery storage systems, in accordance with ASC *360,* Property, Plant, and Equipment and by analogy to ASC *970*-*360*-*25*-*2* and *25*-*3.* These costs *may*include engineering and architectural fees, permitting expenses, site preparation, and construction-related direct and indirect costs related to identified projects expected to reach the construction phase and ultimately be placed in service. Capitalization commences when the project is deemed probable and continues until the assets or projects are substantially complete and ready for their intended use.\n\n \n\nThe Company evaluates the recoverability of capitalized development costs whenever events or changes in circumstances indicate that the carrying amount *may**not* be recoverable. If such indicators are present, the Company performs a recoverability test by comparing the carrying amount of the asset to the sum of the undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount exceeds the estimated future cash flows, an impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. Additionally, if a project is abandoned or it is determined that the asset will *not* be completed or placed into service, the related capitalized costs are written off in the period such determination is made as an Impairment Loss on Development Costs and is recognized on the Consolidated Statements of Operations and Other Comprehensive Income/ Loss).\n\n \n\nIf the Company closes either the purchase or development of a new solar park or a new customer-based microgrid project and begins construction, the balance of these costs is reclassified to Construction in Process (“CIP”) on the Consolidated Balance sheet. Once construction is complete and all costs have been incurred, the final asset balance will be displayed in Property and Equipment and depreciated over its economic useful life as a cost of revenue. If the Company does *not* close on a prospective project, these costs are written off to Development Costs in the Company’s Consolidated Statements of Operations and Comprehensive Income/(Loss).\n\n \n\n**Impairment of Solar Energy Facilities**\n\n \n\nThe Company reviews its investments in property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset *may**not* be recoverable. Impairment is evaluated at the asset group level, which is determined based upon the lowest level of separately identifiable cash flows. When evaluating for impairment, if the estimated undiscounted cash flows from the use of the asset group are less than the asset group’s carrying amount, then the asset group is deemed to be impaired and is written down to its fair value. Fair value is determined by net realizable value of the assets using ASC *820.* The amount of the impairment loss is equal to the excess of the asset group’s carrying value over its estimated fair value.\n\n \n\nDuring the year ended *December 31, 2024,*the Company recorded an impairment loss of $3.3 million in the Consolidated Statement of Operations and Comprehensive Income/(Loss) related to the Spanish assets held for sale to reduce the carrying amount of the assets in the disposal group to their fair value less costs to sell. This was recognized in Other Income/(Expense) for continuing operations on the Consolidated Statement of Operations and Comprehensive Income/(Loss).\n\n \n\nDuring the year ended *December 31, 2025*, the Company recorded no impairment gain or loss in the Consolidated Statement of Operations and Comprehensive Income/(Loss).\n\n \n\n****\n\n**Deferred Financing Costs and Debt Discount Amortization**\n\n \n\nThe Company incurs expenses related to debt arrangements. These deferred financing costs and debt discount costs are capitalized and amortized over the term of the related debt or revolving credit facilities and netted against the related debt.\n\n \n\n****\n\n**Asset Retirement Obligations**\n\n \n\nIn connection with the acquisition or development of solar energy facilities, the Company *may*have the legal requirement to remove long-lived assets constructed on leased property and to restore the leased property to its condition prior to the construction of the long-lived assets. This legal requirement is referred to as an asset retirement obligation (ARO). If the Company determines that an ARO is required for a specific solar energy facility, the Company records the present value of the estimated future liability when the solar energy facility is placed in service as an ARO liability. The discount rate used to estimate the present value of the expected future cash flows for the year ended *December 31, 2024* was 7.3%. The Company accretes the ARO liability to its future value over the solar energy facility’s useful life and records the related interest expense to amortization expense on the consolidated statement of operations. Solar facilities that require AROs are recorded as part of the carrying value of property and depreciated over the solar energy facility’s useful life. There were no ARO's for the year ended *December 31, 2025.*\n\n**\n\n \n\n****\n\n**Leases**\n\n \n\nThe Company accounts for leases in accordance with ASC *842,* *Leases*. The standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than *12* months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations and Other Comprehensive Income/(Loss).\n\n \n\nLease assets and liabilities are recognized based on the present value of the future lease payments over the lease term at the lease commencement date, discounted using the Company’s incremental borrowing rate, and are presented as right of use (“ROU”) assets (for operating leases) or as a component of property and equipment, net (for finance leases) and current and long-term lease liabilities on the Consolidated Balance Sheet. The Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. Refer to Footnote *14* for additional information.\n\n \n\n              The Company recognizes lease costs on a straight-line basis over the lease term without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments.  The Company's lease terms *may*include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.  Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the life of the lease, without assuming renewal features, if any, are exercised.  The Company does *not* separate lease and non-lease components for the Company's leases.\n\n \n\nF-\n*11*\n\n[Table of Contents](#toc)\n\n \n\nOperating lease expense attributable to site leases is reported within cost of revenues in the Company’s Consolidated Statements of Operations and Comprehensive Income/(Loss). Lease expense attributable to all other operating leases is reported within selling, general, and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income/(Loss).\n\n \n\n****\n\n**Revenue Recognition**\n\n \n\nThe Company follows the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic *606,* Revenue from Contracts with Customers (“ASC *606”*). The core principle underlying revenue recognition under ASC *606* is that revenue should be recognized as goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled. ASC *606* defines a *five*-step process to achieve this core principle. ASC *606* also mandates additional disclosure about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.\n\n \n\nThe Company has historically derived revenues through its recently discontinued subsidiaries (see Footnote *6*) from the sale of electricity and the sale of solar renewable energy credits (RECs) in Romania and guarantees of origin certificates (GoOs) in Poland. The Company received Green Certificates based on the amount of energy produced in Romania. Energy generation revenue and solar renewable energy credits revenue are recognized as electricity generated by the Company’s solar energy facilities is delivered to the grid, at which time all performance obligations have been delivered. Revenues are based on actual output and contractual sale prices set forth by its customer contracts.\n\n \n\nThe Company’s historical portfolio of renewable energy facilities were generally contracted under long-term Energy Offtake Agreements (FIT programs/PPAs/VPPAs) with creditworthy counterparties in the respective regions where we operated. Pricing of the electricity sold under these agreements was generally fixed for the duration of the related contracts, although some of its PPAs had price escalators based on an index (such as the consumer price index) or other rates specified in the applicable PPA.\n\n \n\nOne solar park in the Netherlands received pre-payments calculated at the beginning of the year and based on the previous years’ production (MWhs produced) multiplied by a calculated average price per MWh for the year and divided by twelve. The Company recorded revenue monthly by multiplying actual production per the Company’s meters by the average price provided by the Offtaker at the beginning of the year to estimate revenue for the month. There was then a true-up performed in *June*of the following year using actual power produced for the previous year multiplied by the average EPEX price (average actual market price per KWh for the year) less the prepayment for the year. If the true-up calculation was positive, the Offtaker would settle with a payment to the Company. If the true-up was negative, the Company would settle with a payment to the Offtaker.\n\n \n\n**Disaggregated Revenues** \n\n \n\nThe following table shows the Company’s revenues disaggregated by country and contract type:\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Revenue by Country**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nUnited States\n  -   311 \n\nTotal for continuing operations\n $-  $311 \n\n         \n\n**Discontinued Operations:**\n   ** **   ** **\n\nNetherlands\n $-  $16 \n\nPoland\n  -   106 \n\nRomania\n  -   9,687 \n\nTotal for discontinued operations\n $-  $9,809 \n\n**Total for the period**\n $**-**  $**10,120** \n\n \n\n  \n**Year Ended December 31,**\n \n\n**Revenue by Offtake Type**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nCountry Renewable Programs\n $-  $311 \n\nTotal for continuing operations\n $-  $311 \n\n         \n\n**Discontinued Operations:**\n   ** **   ** **\n\nCountry Renewable Programs\n $-  $334 \n\nGreen Certificates\n  -   5,803 \n\nEnergy Offtake Agreements\n  -   3,638 \n\nOther Revenue\n  -   34 \n\nTotal for discontinued operations\n $-  $9,809 \n\n**Total for the period**\n $**-**  $**10,120** \n\n \n\nF-\n*12*\n\n[Table of Contents](#toc)\n\n \n\nThe Company had no revenues during the year ended *December 31, 2025.  *One customer represented 100% of continuing operational revenues during the year ended *December 31, 2024*. \n\n \n\nFive customers represented 76% of the discontinued operational revenues during the year ended *December 31, 2024*. The revenues from these customers accounted for $7.7 million of revenue for the year ended *December 31, 2024.*\n\n**\n\n \n\n****\n\n**Unbilled Energy Incentives Earned**\n\n \n\nThe Company derives revenues from the sale of green certificates for the Romania projects. The green certificates revenues are recognized in the month they are generated by the solar project and registered with the local authority. The Company considers them unbilled at the end of the period if they have *not* been invoiced to a *third*-party customer.\n\n \n\n****\n\n**Cost of Revenues**\n\n \n\nCost of revenues primarily consists of operations and maintenance expense, insurance premiums, property taxes, and other miscellaneous costs associated with the operations of solar energy facilities. Costs are expensed as incurred.\n\n \n\n****\n\n**Taxes Recoverable and Payable**\n\n \n\nThe Company records taxes recoverable when there has been an overpayment of taxes due to timing of the Value Added Tax (VAT) between vendors and customers. The VAT tax can also be offset against a Country’s income taxes where the VAT was registered.\n\n \n\n****\n\n**Capitalized Development Costs and Impairment Policy**\n\n \n\nThe Company capitalizes development costs directly attributable to the design and construction of clean energy facilities, such as solar farms and battery storage systems, in accordance with ASC *360,* Property, Plant, and Equipment. These costs *may*include engineering and architectural fees, permitting expenses, site preparation, and construction-related overhead. Capitalization commences when the project is deemed probable and continues until the asset is substantially complete and ready for its intended use.\n\n \n\nThe Company evaluates the recoverability of capitalized development costs whenever events or changes in circumstances indicate that the carrying amount *may**not* be recoverable. If such indicators are present, the Company performs a recoverability test by comparing the carrying amount of the asset to the sum of the undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount exceeds the estimated future cash flows, an impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. Additionally, if a project is abandoned or it is determined that the asset will *not* be completed or placed into service, the related capitalized costs are written off in the period such determination is made as Development Costs and is recognized on the Consolidated Statements of Operations and Other Comprehensive Income/ Loss).\n\n \n\n****\n\n**Risks and Uncertainties**\n\n \n\n           The Company’s operations are subject to significant risks and uncertainties including financial, operational, technological, and regulatory risks and the potential risk of business failure. Refer to Footnote *2* regarding going concern matters and a discussion of management’s plans to continue to address the conditions that have led to the existence of substantial doubt in the Company’s ability to continue as a going concern.\n\n \n\n****\n\n**Fair Value of Financial Instruments**\n\n \n\nThe Company measures its financial instruments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\n\n \n\nUS GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into *three* (*3*) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The *three* (*3*) levels of fair value hierarchy are described below:\n\n \n\nLevel *1* – Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.\n\n \n\nLevel *2* – Pricing inputs other than quoted prices in active markets included in Level *1* that are either directly or indirectly observable as of the reporting date. Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are *not* active, or other inputs that are observable or can be corroborated by observable market data for substantially of the full term of the related assets or liabilities.\n\n \n\nLevel *3* – Pricing inputs that are unobservable. Financial assets are considered Level *3* when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least *one* significant model assumption or input is unobservable.\n\n \n\nThe Company holds various financial instruments that are *not* required to be measured at fair value.  The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. For cash and cash equivalents, restricted cash, accounts receivable, various debt instruments, prepayments and other current assets, accounts payable, accrued liabilities, and other current liabilities, the carrying value approximated their fair values due to the short-term maturity of these instruments. The Company’s forward purchase agreement asset is considered a Level *3* financial instrument at fair value and is described below in Footnote *5.*\n\n**\n\n \n\nF-\n*13*\n\n[Table of Contents](#toc)\n\n \n\n****\n\n**Business Combinations and Acquisition of Assets**\n\n \n\nThe Company applies the definition of a business in ASC *805,* *Business Combinations,* to determine whether it is acquiring a business or a group of assets. When the Company acquires a business, the purchase price is allocated to; (i) the acquired tangible assets and liabilities assumed, primarily consisting of solar energy facilities and land, (ii) the identified intangible assets and liabilities, primarily consisting of intellectual property (“IP”), favorable and unfavorable rate Power Purchase Agreements (PPAs), Renewable Energy Credit (REC) agreements, and favorable or below-market exclusive consulting agreements (iii) asset retirement obligations, (iv) non-controlling interest, and (v) other working capital items based in each case on their estimated fair values. The excess of the purchase price, if any, over the estimated fair value of net assets acquired is recorded as goodwill. The fair value measurements of the assets acquired, and liabilities 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 required significant judgments and estimates at the time of the valuation. In addition, acquisition costs related to business combinations are expensed as incurred.\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, including legal and financing fees directly related to the acquisition incurred, 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’s consolidated financial statements:\n\n \n\n \n●\n\nThe amount of purchase price allocated to the various tangible and intangible assets and liabilities on the Company Balance Sheet; and\n\n \n\n \n●\n\nThe amounts allocated to all other tangible and intangible assets are amortized to depreciation or amortization expense, with the exception of favorable and unfavorable rate land leases and unfavorable rate Operation and Maintenance (O&M) contracts which are amortized to cost of revenue.\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 the Company’s results of operations.\n\n \n\n****\n\n**Impairment 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\n****\n\n**Goodwill 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\n****\n\n**Income Taxes**\n\n \n\nDeferred taxes are determined using the asset and liability method. Deferred tax assets are recognized for deductible temporary differences, operating loss, and tax credit carry forwards. Deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.\n\n \n\nThe Company evaluated the provisions of ASC *740* related to the accounting for uncertainty in income taxes recognized in the financial statements. ASC *740* prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the company has taken or expects to take in its return. For those benefits to be recognized, a tax position must be more-likely-than-*not* to be sustained upon examination by taxing authorities. Differences between the positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was *not* recognized as a result of applying the provisions of ASC *740.*\n\n \n\nAs a result of the Tax Cuts and Jobs Act (TCJA) of *2017,* the Company analyzed if a liability needed to be recorded for the deemed repatriation of undistributed earnings. It was determined that there is *no* outstanding liability associated with this based on overall negative undistributed earnings (accumulated deficit) in the consolidated foreign group. An additional provision of the TCJA is the implementation of the Global Intangible-Low Taxed Income Tax, or “GILTI.” The Company has elected to account for the impact of GILTI in the period in which the tax applies to the Company.\n\n \n\nPenalties and interest assessed by income tax authorities would be included in income tax expense. The company incurred penalties of $0.1 million and $0.2 million for the period ended *December 31, 2025*and *2024*, respectively.\n\n \n\nF-\n*14*\n\n[Table of Contents](#toc)\n\n \n\n****\n\n**Stock-Based Compensation**\n\n \n\nThe Company accounts for stock-based compensation in accordance with ASC *718.* Stock-based compensation expense for equity instruments issued to employees and non-employees is measured based on the grant-date fair value of the awards. The fair value of each stock unit is determined based on the valuation of the Company’s stock on the date of grant. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton stock option pricing valuation model. The Company uses a simplified method for calculating the expected term of their options. The Company recognizes compensation costs using the straight-line method for equity compensation awards over the requisite service period of the awards, which is generally the awards’ vesting period. The Company accounts for forfeitures of awards in the period they occur.\n\n \n\nUse of the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including (*1*) the expected terms of the option, (*2*) the expected volatility of the price of the Company’s common stock, and (*3*) the expected dividend yield of our common stock. The assumptions used in the option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgments. If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. Additional inputs to the Black-Scholes-Merton option-pricing model include the risk-free interest rate and the fair value of the Company’s common stock. The Company determines the risk-free interest rate by using the United States Treasury Rates of the same period as the expected term of the stock-option.\n\n \n\n****\n\n**Net Loss Per Share**\n\n \n\nNet loss per share is computed pursuant to ASC *260,* *Earnings per Share*. Basic net loss per share attributable to common shareholders is computed by dividing net loss attributable to common shareholders by the weighted average number of common stock outstanding for the period. Diluted net loss per share attributable to common shareholders is computed by dividing net loss attributable to common shareholders by the weighted average number of common stock outstanding for the period plus the number of common stock that would have been outstanding if all potentially dilutive common stock had been issued, using the treasury stock method or if-converted method, as applicable. Potentially dilutive shares related to stock options, warrants, and convertible notes were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect due to losses in each period. The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\nWarrants\n  3,706,258   3,000,149 \n\n2024 Convertible Notes\n  359,530   **-** \n\nOID Convertible Notes\n  2,550,867   **-** \n\nSeries B Convertible Preferred Stock\n  5,417,260   **-** \n\n**Total**\n  **12,033,915**   **3,000,149** \n\n \n\n****\n\n**Foreign Currency Transactions and Other Comprehensive Loss**\n\n \n\nForeign currency transactions are those transactions whose terms are denominated in a currency other than the currency of the primary economic environment in which the Company operates, which is referred to as the functional currency. The functional currency of the Company’s foreign subsidiaries is typically the applicable local currency which is the Romanian Lei (RON), the Polish Zloty (PLN), or the European Union Euro (EUR). Transactions denominated in foreign currencies are remeasured to the functional currency using the exchange rate prevailing at the balance sheet date for balance sheet accounts and using an average exchange rate during the period, which approximates the daily exchange rate, for income statement accounts. Foreign currency gains or losses resulting from such remeasurement are included in the Consolidated Statement of Operations and Comprehensive Income/(Loss) in the period in which they arise.\n\n \n\nTransaction gains and losses are recognized in the Company’s Consolidated Statement of Operations and Comprehensive Income/(Loss) based on the difference between the foreign exchange rates on the transaction date and on the reporting date. The Company had an immaterial net foreign exchange loss for the year ended *December 31, 2025*and *2024*.\n\n \n\nThe translation from functional foreign currency to United States Dollars (USD) is performed for asset and liability accounts using current exchange rates in effect at the balance sheet date and using an average exchange rate during the period, which approximates the daily exchange rate, for income statement accounts. The effects of translating financial statements from functional currency to reporting currency are recorded in other comprehensive income. For the years ended *December 31, 2025*and *2024*, the increase/(decrease) in comprehensive loss related to foreign currency translation gains was $0.2 and $0.2 million, respectively.\n\n \n\n****\n\n**Recently Issued Not Yet Effective Accounting Standards**\n\n \n\nIn *October 2023,*the FASB issued ASU *2023*-*06,* *Disclosure Improvements: Codification Amendments in Response to the SEC*’*s Disclosure Update and Simplification Initiative*. For SEC registrants, the effective date for each amendment will be the date on which the SEC’s removal of the related disclosure requirement from Regulation S-*X* or Regulation S-K becomes effective. If the SEC has *not* removed the applicable requirement by *June 30, 2027,*the related amendment will *not* become effective. The Company is currently evaluating the impact of this guidance on its disclosures.\n\n \n\nIn *March 2024,*the FASB issued ASU *2024*-*03,* Income Statement — Reporting Comprehensive Income (Subtopic *220*-*40*): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, on an annual and interim basis, specified expense captions (such as cost of sales, SG&A, and R&D) disaggregated by their natural components (e.g., compensation, depreciation, amortization, and inventory/overhead costs). The ASU is effective for fiscal years beginning after *December 15, 2026,*and interim periods within fiscal years beginning after *December 15, 2027;*early adoption is permitted. The Company is currently evaluating the impact of this guidance on its disclosures. Because the ASU expands footnote requirements without affecting recognition or measurement, management does *not* expect the adoption to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.\n\n \n\nIn *January 2025,*the FASB issued ASU *2025*-*01* to clarify the effective dates of ASU *2024*-*03.* The clarification confirms that the annual disclosures are required for fiscal years beginning after *December 15, 2026,*and the interim disclosures are required for interim periods within fiscal years beginning after *December 15, 2027.*Early adoption remains permitted. The Company’s evaluation of ASU *2024*-*03,* as clarified by ASU *2025*-*01,* is ongoing. The Company expects the standard to result in enhanced disaggregation of expense information within the notes to the financial statements but does *not* anticipate a material effect on its consolidated financial statements.\n\n \n\nF-\n*15*\n\n[Table of Contents](#toc)\n\n \n\nIn *April 2024,*the FASB issued ASU *2024*-*04,* Debt — Debt with Conversion and Other Options (Subtopic *470*-*20*): Induced Conversions of Convertible Debt Instruments. The ASU provides explicit guidance on how issuers should account for inducements offered to holders to convert convertible debt to equity instruments, requiring the difference between the fair value of consideration transferred and the fair value of securities issuable under the original conversion terms to be recognized as an expense at the inducement date. The ASU is effective for all entities for fiscal years beginning after *December 15, 2025,*and interim periods within those fiscal years. The Company is assessing the impact of ASU *2024*-*04.* Because the Company has *not* historically entered into conversion inducements, management does *not* expect adoption to materially affect its consolidated financial statements.\n\n \n\nIn *March 2025,*the FASB issued ASU *2025*-*03,* Business Combinations (Topic *805*) and Consolidation (Topic *810*): Determining the Accounting Acquirer When the Legal Acquiree Is a Variable Interest Entity. The amendment clarifies how an entity identifies the accounting acquirer in a business combination when the legal acquiree is a VIE, aligning the guidance with the broader control and consolidation framework under ASC *810.* The ASU is effective for public business entities for fiscal years beginning after *December 15, 2026,*and interim periods within those years; early adoption is permitted. The Company is currently evaluating the impact of this guidance. The adoption of ASU *2025*-*03* is *not* expected to have a material impact on the Company’s consolidated financial statements but *may*affect future acquisition analyses and related disclosures.\n\n \n\nOn various dates in *2025,* the FASB issued several narrow-scope ASUs, including ASU *2025*-*04* through ASU *2025*-*12* (in addition to the others discussed above), addressing topics such as VIE acquisition accounting, share-based consideration payable to customers, credit losses, internal-use software, derivatives and hedging, government grants, interim reporting, and codification improvements. The effective dates for these standards generally begin in annual periods after *December 15, 2026*through *December 15, 2028,*depending on the standard. The Company is currently evaluating the impact of these standards and does *not* expect them to have a material impact on its consolidated financial statements or related disclosures, except for any additional disclosure requirements that *may*apply.\n\n \n\n**Convertible Debt Instruments**\n\n \n\nThe Company accounts for convertible debt instruments in accordance with ASC *470*-*20,* Debt with Conversion and Other Options. In accordance with ASU *2020*-*06,* the Company does *not* separately account for the embedded conversion feature of convertible instruments unless it meets the criteria for a derivative or requires bifurcation under other applicable guidance.\n\n \n\nConvertible debt is initially recorded at its principal amount, net of any issuance costs, which are amortized to interest expense using the effective interest method over the contractual term of the debt. Interest expense is recognized based on the stated coupon rate unless the instrument contains a significant premium or discount.\n\n \n\nIf the convertible instrument includes embedded features that qualify for derivative accounting, the fair value of such features is separated and accounted for as a derivative liability, with changes in fair value recognized in the statement of operations (unless the Fair Value Option (FVO) is elected with respect to the hybrid debt instrument).\n\n \n\nUpon conversion or settlement of the debt, the Company derecognizes the liability and records any difference between the carrying amount and the fair value of the consideration transferred in equity or the income statement, as appropriate.\n\n \n\nThe Company evaluates its convertible debt instruments for classification between liabilities and equity, as well as for potential beneficial conversion features or other embedded features requiring separate accounting.\n\n \n\n**Fair Value Option**–**Hybrid Debt Instruments**\n\n \n\nThe Company has elected the fair value option under ASC *825*-*10,* Financial Instruments – Fair Value Option, for certain hybrid debt instruments that contain embedded features which would otherwise require bifurcation and separate accounting under ASC *815,* Derivatives and Hedging (refer to the *2024* Convertible Notes and OID Convertible Notes included in Note *4*). The election simplifies accounting by measuring the entire instrument at fair value, with changes in fair value recognized in earnings. Fair value is determined using observable market data when available and valuation models when observable inputs are *not* readily available. Changes in fair value attributable to both credit risk and market risk are recorded in Other income (expense), net in the Consolidated Statement of Operations and Other Comprehensive Income/(Loss).\n\n \n\nThe initial fair value of the instrument includes any embedded features. Transaction costs incurred in connection with the issuance of the instrument are expensed as incurred in accordance with ASC *825*-*10*-*25*-*3.* Instruments for which the fair value option has been elected are classified as short-term or long-term liabilities based on their contractual maturity dates. The Company evaluates the appropriateness of the fair value measurement hierarchy at each reporting period and discloses the level within the fair value hierarchy (Level *1,* Level *2,* or Level *3*) accordingly.\n\n \n\n**Recent Accounting Pronouncements**\n\n \n\nIn *December 2023,*the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) *2023*-*09,* Income Taxes (Topic *740*): Improvements to Income Tax Disclosures to enhance the transparency of income tax disclosures relating to the rate reconciliation, disclosure of income taxes paid, and certain other disclosures. The ASU should be applied prospectively and is effective for annual periods beginning after *December 15, 2024,*with early adoption permitted. The Company is currently evaluating the impact on the related disclosures; however, it does *not* expect this update to have an impact on its financial condition or results of operations.\n\n \n\nIn *November 2023,*the FASB issued ASU *2023*-*07,* Segment Reporting (Topic *280*): Improvements to Reportable Segment Disclosures to improve the disclosures about reportable segments and include more detailed information about a reportable segment’s expenses. This ASU also requires that a public entity with a single reportable segment, provide all of the disclosures required as part of the amendments and all existing disclosures required by Topic *280.* The ASU should be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after *December 15, 2023*and interim periods within fiscal years beginning after *December 15, 2024.*The Company adopted this in the year ended *December 31, 2025*.\n\n \n\nF-\n*16*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**4.**\n\n**Fair Value Measurements**\n\n \n\nFair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a *three*-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The *three* levels of inputs used to measure fair value are as follows:\n\n \n\nLevel *1* — Quoted prices in active markets for identical assets or liabilities.\n\n \n\nLevel *2* — Observable inputs other than quoted prices included in Level *1,* such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are *not* active; or other inputs that are observable or can be corroborated by observable market data.\n\n \n\nLevel *3* — Unobservable inputs that are supported by little or *no* market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.\n\n \n\nAs of *December 31, 2025*, the summary of the fair value instruments held by the Company were as follows, in thousands:\n\n \n\n  \n**Fair Value Measurement**\n \n\n  \n**Level 1**\n  \n**Level 2**\n  \n**Level 3**\n  \n**Total**\n \n\nConvertible Loan Note\n  -   -   9,900   9,900 \n\nWarrant Liability\n  -   -   -   - \n\n**Total**\n $**-**  $**-**  $**9,900**  $**9,900** \n\n \n\n**Valuation Techniques**\n\n \n\n \n●\n\nConvertible Loan Note (fair value option): Valued using unobservable inputs that are *not* corroborated by market data (Level *3*).\n\n \n\n \n●\n\nWarrant Liability: Valued using unobservable inputs that are *not* corroborated by market data (Level *3*).\n\n \n\nOn *December **3,* *2023,* the Company entered into an agreement with (i) Meteora Capital Partners, LP, (ii) Meteora Select Trading Opportunities Master, LP, and (iii) Meteora Strategic Capital, LLC (collectively “Meteora”) for OTC Equity Prepaid Forward Transactions (the “FPA”). The purpose of the FPA was to decrease the amount of redemptions in connection with the Company’s Special Meeting and potentially increase the working capital available to the Company following the Business Combination. \n\n \n\nPursuant to the terms of the FPA, Meteora purchased 111,862 (the “Purchased Amount”) shares of common stock concurrently with the Business Combination Closing pursuant to Meteora’s FPA Funding Amount PIPE Subscription Agreement, less the 52,013 shares of common stock separately purchased from *third* parties through a broker in the open market (“Recycled Shares”). Following the consummation of the Business Combination, Meteora delivered a Pricing Date Notice dated *December 10, 2023,*which included 52,013 Recycled Shares, 59,849 additional shares and 111,862 total number of shares. The FPA provides for a prepayment shortfall in an amount in US dollars equal to $500,000. Meteora in its sole discretion *may*sell Recycled Shares at any time following the Trade Date at prices (i) at or above $250.00 during the *first* *three* months following the Closing Date and (ii) at any sales price thereafter, without payment by Meteora of any Early Termination Obligation until such time as the proceeds from such sales equal *100%* of the Prepayment Shortfall. The number of shares subject to the Forward Purchase Agreement is subject to reduction following a termination of the FPA with respect to such shares as described under “Optional Early Termination” in the FPA. The reset price is set at $250.00. Commencing from *June 22, 2024,*the reset price is subject to reduction upon the occurrence of a Dilutive Offering. \n\n \n\nThe Company holds various financial instruments that are *not* required to be recorded at fair value. For cash, restricted cash, accounts receivable, accounts payable, and short-term debt, the carrying amounts approximate fair value due to the short maturity of these instruments.\n\n \n\nThe fair value of the Company’s recorded forward purchase agreement (“FPA”) is determined based on unobservable inputs that are *not* corroborated by market data, which require a Level *3* classification. The Company records the forward purchase agreement at fair value on the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operation.\n\n \n\nThe following table presents changes of the forward purchase agreement with significant unobservable inputs (Level *3*) as of *December 31, 2025*, in thousands:\n\n \n\n  \n**Forward**\n \n\n  \n**Purchase**\n \n\n  \n**Agreement**\n \n\nBalance at January 1, 2024\n $483- \n\nChange in fair value\n  (483)\n\nBalance at December 31, 2024\n  - \n\nChange in fair value\n  - \n\n**Balance at December 31, 2025**\n $- \n\n \n\nF-\n*17*\n\n[Table of Contents](#toc)\n\n \n\nThe Company measures the *April 19, 2024*convertible note and private placement warrants using a Monte Carlo simulation valuation model and applying the following assumptions as of *December 31, 2025*:\n\n \n\n  \n**Convertible**\n  \n**Warrant**\n \n\n  \n**Loan Note**\n  \n**Liability**\n \n\nRisk-free rate\n  3.67%  3.67%\n\nUnderlying stock price\n $-  $- \n\nExpected volatility\n  55%  55%\n\nTerm (in years)\n  1.00   4.31 \n\nDividend yield\n  0%  0%\n\n \n\nThe following table presents changes of the convertible note and private placement warrants issued *April 2024*with significant unobservable inputs (Level *3*) as of *December 31, 2025,*in thousands:\n\n \n\n  \n**2024**\n  \n**OID**\n   * *** **\n\n  \n**Convertible**\n  \n**Convertible**\n   * *** **\n\n  \n**Notes**\n  \n**Notes**\n  \n**Total**\n \n\n  \n**(in thousands)**\n \n\n**Balance at December 31, 2024**\n $**1,702**  $**-**   **1,702** \n\nReclass of accrued interest to convertible note\n  471   -   471 \n\nConversions\n  (2,336)  -   (2,336)\n\nNotes reclassified upon reevaluation of embedded features\n  -   1,975   1,975 \n\nLoss from extinguishment of debt\n  -   3,187   3,187 \n\nNew convertible notes issued at fair value\n  -   935   935 \n\nMovement in fair value\n  728   3,239   3,967 \n\n**Balance at December 31, 2025**\n $**565**  $**9,336**  $**9,900** \n\n \n\nThe fair values of these Level *3* liabilities are sensitive to unobservable inputs used in the Monte Carlo simulation valuation model, including discount rates, expected term, expected volatility, path dependency parameters and estimates of various payout outcomes. Changes to these inputs could result in significantly higher or lower fair value measurement.\n\n \n\n**5.**\n\n**LiiON Rescission**\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). Also, in connection with the APA, the Company entered into an exclusive consulting agreement, with an initial term of 3 years, providing the Company with the right to receive consulting services of *three* key employees of the LiiON Battery Storage Business to assist with the transition and integration into the Company’s business.\n\n \n\nThe Company and LiiON LLC mutually agreed to rescind the Asset Purchase Agreement. The primary driver that led the Parties to discuss alternative plans was the *February 2025*Nasdaq notice that the Company’s equity had been delisted. Prior to receiving the notice, the Company expected Nasdaq to provide an extension of time to correct the matters that resulted in delisting. Although the acquisition Agreement permitted the Company to issue restricted common stock (i.e., active listing was *not* necessary to fulfill the requirements), questions around the timing of the Company’s ability to raise additional equity funding to support its integration plan, caused by the delisting, led the Parties to discussions regarding the path forward which, ultimately, culminated with the Parties’ mutual decision to rescind the Agreement.\n\n \n\nTherefore, on *May 1, 2025*the Company and its wholly owned subsidiary, BESS, LLC, entered into a Rescission and Release Agreement with LiiON (the “Rescission”) resulting in the unwinding of all consideration transferred and legal ownership. The parties rescinded the Asset Purchase Agreement, as well as the $2,000,000 promissory note issued to LiiON and the exclusive consulting agreement with *one* of LiiON’s affiliate companies, and to release *one* another from any and all obligations and liabilities related thereto.\n\n \n\nUpon the unwinding of the remaining net book values of the promissory note and the net assets acquired of on the rescission date, the Company recognized a loss of $33,700.\n\n \n\n \n\n**6.**\n\n**Formation of EverOn Energy Joint Venture and Consolidation of Variable Interest Entity**\n\n \n\n**Background and Transaction Overview**\n\n \n\n**Strategic Alliance Agreement.**Prior to *September 30, 2025,*the Company (via its wholly owned subsidiary Alt Alliance LLC) and Hover (collectively, the \"Parties\") were parties to a Strategic Alliance Agreement (the \"SAA\") pursuant to which the Company provided funding support for Hover's development of Microgrid Projects in return for Hover’s commitment to present projects having a defined value to the Company (i.e., for *first* right of consideration for purchase, lease, etc.).\n\n \n\n**Joint Venture Formation.**On *March 24, 2025,*the Company incorporated a new legal entity (the “JV”) with *no* assets or operations for the purpose of entering into a future joint venture operating agreement (“JVOA”) with Hover. On *September 30, 2025 (*the “Transaction Date”), the Company and Hover finalized the JVOA and contemporaneously terminated the preexisting SAA. Under the terms of the JVOA:\n\n \n\n \n●\n\nHover contributed its portfolio of developed Microgrid Projects and related customer relationships in exchange for a 49% equity (“Member”) interest in the JV.\n\n \n\nF-\n*18*\n\n[Table of Contents](#toc)\n\n \n\n \n●\n\nThe Company retained a 51% interest in the JV in exchange for (i) 20,000 shares of Series B Convertible Preferred Stock (“Series B”) of the Company with a fair value of approximately $30.5 million issued to Hover, (ii) developed software contributed to the JV with a fair value approximately $0.9 million, and (iii) approximately $5.2 million of costs previously capitalized under the SAA that were subsumed into the fair value of the projects contributed by Hover.\n\n \n\n \n●\n\nThe JV entered into (i) separate Master Services Agreements with each of the Company and Hover and (ii) an Equipment Supply Agreement with Hover.\n\n \n\n**Master Services Agreements.**Concurrently with the execution of the JVOA, the JV entered into separate Master Services Agreements (“MSAs”) with the Company and Hover. As further described below, it was *not* until the MSAs were executed – which provided the JV with an assembled skilled workforce capable of processing the contributed inputs to generate outputs – that the JV *first* met the definition of a “business” under ASC *805.*\n\n \n\n**Execution of JVOA. **On *September 30, 2025,*the Company entered into and closed a Securities Purchase Agreement (“SPA”) and a Joint Venture Operating Agreement (“JVOA”) with Hover Energy LLC (“Hover”), a Delaware company engaged in the business of developing, manufacturing and deploying distributed generation renewable energy projects featuring Hover wind powered generators together with varied generation and storage technologies (“Microgrid Projects”), pursuant to which Alternus sold a 49% interest in its subsidiary, EverOn Energy LLC (the “JV”) to Hover, and issued 20,000 shares of the Company’s Series B Convertible Preferred Stock (the “Series B”) to Hover, in exchange for which Hover contributed certain Microgrid Projects to the JV, including related supply and management services agreements to be entered into with the JV (together, the transaction hereinafter shall be referred to as the “Joint Venture”).\n\n \n\nAdditionally, *one* of the Company’s subsidiaries, Alt Alliance LLC, entered into a Settlement Agreement with Hover related to the termination of the Strategic Alliance Agreement dated *October 31, 2023 (*“SAA”) as the Joint Venture has superseded the SAA. As part of the settlement, the Company agreed to repay the total outstanding amount of $5.2 million, including the reinstitution of $1.4 million of value that the Company previously paid in restricted shares of common stock that had declined in value from the time of issuance through the *September 30, 2025*settlement date. The amounts owed to Hover under the SAA are to be repaid through the following methods: i) $1.2 million through the issuance of 1,150 shares of Series B, ii) $1.7 million by Southern Point Capital through the settlement agreement and stipulation as previously disclosed in the Company’s SEC Current Report on Form *8*-K filed on *May 2, 2025,*and iii) $2.3 million to be repaid in cash by the Company as mutually agreed upon by both parties from time to time. Upon preparation of a *third* party valuation, the Series B shares were determined to have a fair value of $1.8 million and therefore, together with the agreed repayment for the decreased value of shares previously issued, the company recorded a loss of  $2.0 million in income statement to reflect this. Of the remaining 2.3 million that remains due to Hover relating to the settlement, $1.4 million related to the previously issued common stock is included in other payables and the remainder is included in accounts payable in the Company's consolidated balance sheets as of *December 31, 2025. *\n\n \n\nIn connection with the JVOA, the Company issued 20,000 shares of Series B to Hover valued at $1,526 per share for an aggregate value of approximately $30.5 million. Together with the contribution of $5.2 million in value attributed to Hover’s costs reimbursed by the Company pursuant to the pre-existing SAA, and *$0.9* million in contributed software, the total consideration paid for the Company’s 51% interest was *$36.5* million and the estimated fair value of Hover’s 49% non-controlling interest was determined to be $20.4 million. The Joint Venture brings in a substantial pipeline of Wind Powered Microgridstm projects and clients in the UK and the US, and the Company believes that the Joint Venture will immediately improve Company’s stockholder’s equity. The Company has determined the JV's enterprise value to be $56.9 million, based on a *third* party valuation.\n\n \n\n**CONSOLIDATION**–**VARIABLE INTEREST ENTITY**\n\n \n\n**(a)**\n\n**VIE Determination**\n\n \n\nThe Company evaluated the JV for consolidation under ASC *810,* *Consolidation*. An entity is considered a variable interest entity (\"VIE\") if, by design, it (i) has insufficient equity investment at risk to finance its activities without additional subordinated financial support, (ii) has equity investors that, as a group, lack the ability to make decisions about the entity's activities through voting or similar rights, lack the obligation to absorb expected losses, or lack the right to receive expected residual returns, or (iii) has voting rights that are disproportionate to the economic interests of the equity investor and the entity's activities are conducted on behalf of an investor with disproportionately few voting rights.\n\n \n\nThe Company concluded that the JV is a VIE because it was capitalized with insufficient equity at risk — that is, the equity contributions at inception were *not* sufficient to finance the JV's projected activities without the expectation of additional subordinated financial support from its members. This conclusion was based on a quantitative and qualitative assessment of the JV's projected operational funding requirements relative to its initial equity capitalization.\n\n \n\n**(b)**\n\n**Primary Beneficiary Determination**\n\n \n\nUnder ASC *810*-*10*-*25*-*38A,* the primary beneficiary of a VIE is the entity that has both: (i) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. The Company determined that it is the primary beneficiary of the JV based on the following analysis:\n\n \n\n**1. Power Criterion:**The JV Operating Agreement grants the Company certain tie-breaking governance rights over all significant operating and financial decisions of the JV, including those decisions most likely to have the greatest impact on the JV's economic performance. Hover does *not* hold substantive participating rights that would overcome the Company’s power over such activities.\n\n \n\n**2. Economic Criterion:**The Company’s obligation to absorb losses and right to receive benefits is consistent with its 51% equity interest and, in conjunction with its governance rights, exceeds that of Hover’s 49% interest. Accordingly, the Company’s economic exposure is more significant than Hover’s relative to the JV as a whole.\n\n \n\nAs a result of this assessment, the Company consolidates the JV in its consolidated financial statements with Hover's 49% interest presented as a non-controlling interest (“NCI”) in equity.\n\n \n\n**(c)**\n\n**Reassessment**\n\n \n\nThe Company will reassess, each reporting period, whether it continues to be the primary beneficiary of the JV upon the occurrence of reconsideration events, including any change in the governing documents, contractual arrangements, or economic interests of the JV.\n\n \n\n**(d)**\n\n**Nature of Assets, Liabilities, and Restrictions**\n\n \n\nThe *December 31, 2025*consolidated balance sheet reflects the assets and liabilities of the JV based on the purchase price allocation performed in accordance with ASC *805.* The assets of the JV can only be used to settle the obligations of the JV and are *not* available for the general use of the Company. The liabilities of the JV do *not* have recourse to the general credit of the Company beyond any commitments made in its capacity as a Member.\n\n \n\nF-\n*19*\n\n[Table of Contents](#toc)\n\n \n\n**ACCOUNTING FOR THE ACQUISITION AS A BUSINESS COMBINATION**\n\n \n\n**(a)**\n\n**Application of the Acquisition Method**\n\n \n\nThe Company’s obtaining control of the JV as primary beneficiary on the Transaction Date was accounted for as a business combination under ASC *805,* *Business Combinations*. Although the assets and processes initially contributed to the JV by the Company and Hover, considered in isolation, did *not* meet the definition of a business as defined in ASC *805,* the JV *first* met the definition of a business — and the Company *first* obtained control — at the moment the JV simultaneously entered into the MSAs with both Parties. The MSAs provided the JV with an assembled skilled workforce, which, combined with the contributed inputs and processes, enabled the JV to produce outputs for the *first* time. This acquisition of a skilled workforce through the MSAs represented the *first* point in time at which (i) all *three* elements of a business (inputs, processes to be applied to those inputs, and the ability to apply those processes to inputs in order to contribute to the creation of outputs) were present, and (ii) the Company exercised control over a business through the JVOA. Accordingly, *September 30, 2025*represents the acquisition date for purposes of ASC *805.*\n\n \n\n**(b)**\n\n**Identification and Measurement of Consideration Transferred**\n\n \n\nUnder the acquisition method, the consideration transferred is measured at fair value as of the acquisition date. The total consideration transferred for the Company’s 51% interest, together with the fair value of the noncontrolling interest (Hover’s 49%), constitutes the total fair value of invested capital of the JV. The components of consideration transferred and the derivation of total invested capital are summarized below:\n\n \n\n**Consideration transferred - Company's 51% Interest:**\n ** **** Fair Value (in thousands)**** **\n\n     \n\nSeries B Convertible Preferred Stock issued to Hover\n $30,523 \n\nOASIS Software contributed to JV at fair value\n  860 \n\nCapitalized development costs subsumed\n  5,150 \n\n**Total Consideration for Company's 51%**\n **$****36,533** \n\nFair Value of NCI (i.e., Hover's 49% Interest)\n  20,411 \n\n**Total Fair Value of Invested Capital**\n **$****56,944** \n\n \n\nThe preferred stock issued to Hover is based on a *third*-party valuation of $30.5 million at the Transaction Date. The $5.2 million of capitalized development costs represents amounts previously incurred by the Company under the SAA that were absorbed into the purchase price allocation. The NCI was measured at fair value of $20.4 million based on a *third*-party valuation.\n\n \n\n**(c)**\n\n**Purchase Price Allocation**\n\n \n\nThe total fair value of invested capital of *$56.9* million has been allocated to identifiable assets and goodwill as follows. The Company engaged a *third*-party valuation specialist to assist with the final purchase price allocation.\n\n \n\n**Identifiable Intangible Assets and Goodwill — Purchase Price Allocation**\n \n**Fair Value**\n\n**(in thousands)**\n  \n**Estimated Useful Life         (in years)**\n \n\nCustomer relationships\n $26,190   24 \n\nFavorable contract\n  10,930   15 \n\nOASIS software\n  860   15 \n\nGoodwill\n  18,964  \n \n*Indefinite* \n\n**Total Fair Value of Invested Capital**\n **$****56,944**  ** **** **** **\n\n \n\n*No* liabilities were assumed in connection with the transaction. The JV had no assets other than those included in the purchase price allocation above prior to the Transaction Date. The excess of the total fair value of invested capital over the net identifiable assets acquired has been recognized as goodwill of $19.0 million, which is attributable to expected synergies and the premium paid for control of the JV. Goodwill is *not* deductible for income tax purposes.\n\n \n\n**(d)**\n\n**Noncontrolling Interest (**“**NCI**”**)**\n\n \n\nThe NCI, representing Hover's 49% equity interest in the JV, has been recognized at its acquisition-date fair value of $20.4 million. Subsequent to the acquisition date, the carrying amount of the NCI will be adjusted for its proportionate share of the JV's net income (loss) and other comprehensive income (loss), and for any capital contributions or distributions made by or to Hover.\n\n \n\n**(e)**\n\n**Supplemental Pro Forma Information**\n\n \n\nThe following unaudited supplemental pro forma information presents the combined results of operations of the Company and JV as if the acquisition occurred on *January 1, 2024 –*the beginning of the earliest period presented. The pro forma information is presented for informational purposes only and is *not* necessarily indicative of what the Company’s actual results of operations would have been had the acquisition been completed on that date nor is it indicative of future results.\n\n \n\n \n\n  \n**Year-ended**\n  \n**Year-ended**\n \n\n  \n**December 31,**\n  \n**December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\nRevenue\n $-  $311 \n\nNet Income / (loss)\n $(10,486) $16,838 \n\n \n\n*Presented on a consolidated company basis before allocation of losses to the non-controlling interest of ($1,558) and ($2,077) for the years ended *December 31, 2025*and *2024,* respectively, relating to the non-controlling interest holder's share of JV losses.\n\n \n\nF-\n*20*\n\n[Table of Contents](#toc)\n\n \n\n**IDENTIFIED INTANGIBLE ASSETS**\n\n \n\n**(a)**\n\n**Classification and Useful Lives**\n\n \n\nIn connection with the purchase price allocation, the Company identified the following finite-lived intangible assets that are subject to amortization:\n\n \n\n  \n**Gross Carrying**\n\n**Amount (in thousands)**\n  \n**Annual**\n\n**Amortization (in thousands)**\n  \n**Estimated Useful**\n\n**Life (in years)**\n \n\nCustomer relationships\n $26,190  $1,091   24 \n\nFavorable contract\n  10,930   729   15 \n\nOASIS Software\n  860   57   15 \n\n**Total Amortizable Intangibles**\n **$****37,980**  **$****1,877**  ** **** **** **\n\n \n\n \n\n**Customer Relationships ($26.2 million):**Represents the fair value of Hover's preexisting customer relationships based on the multi-period excess earnings approach. The customer relationships asset is amortized on a straight-line basis over its estimated useful life of 24 years resulting in annual amortization of $1,091. Amortization expense of $273 was recorded related to the customer relationship asset from the date of acquisition through *December 31, 2025. *\n\n \n\n**Favorable Contract ($10.9 million):**Represents the fair value of favorable or below-market purchase or license terms determined using a differential cash flow method. The below-market contract intangible is amortized on a straight-line basis over the weighted-average remaining term of assumed benefit, estimated to be 15 years, resulting in annual amortization expense of $729. Amortization expense of $182 was recorded related to the favorable contract asset from the date of acquisition through *December 31, 2025.*\n\n \n\n**OASIS Software ($0.9 million):**Represents the fair value of the Company’s OASIS Software contributed to the JV determined using the replacement cost method. The OASIS Software intangible is amortized on a straight-line basis over the weighted-average remaining term of assumed benefit, estimated to be 15 years, resulting in annual amortization expense of $57. Amortization expense of $14 was recorded related to the OASIS software asset from the date of acquisition through *December 31, 2025.*\n\n \n\nFrom the date of acquisition through *December 31, 2025*the Company recognized total amortization expense of $469. Identifiable assets, net of accumulated amortization of $469 as of *December 31, 2025,*was $37,518.\n\n \n\n**IMPAIRMENT CONSIDERATIONS**\n\n \n\n**(a)**\n\n**Finite-Lived Intangible Assets and Long-Lived Assets**\n\n \n\nFinite-lived intangible assets and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group *may**not* be recoverable. Recoverability is assessed by comparing the carrying amount of the asset or asset group to the undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount exceeds the sum of the undiscounted future cash flows, an impairment loss is recognized equal to the amount by which the carrying amount exceeds the asset's fair value. As a result of the JV transaction being recorded as a business combination with identifiable assets initially recognized at fair value on the Transaction Date, only *three* months prior to the *December 31, 2025*balance sheet date, *no* impairment indicators were identified as of *December 31, 2025*with respect to the JV's finite-lived intangibles or long-lived assets. Therefore, no impairment was recorded for the period ended *December 31, 2025.*\n\n \n\n**(b)**\n\n**Goodwill**\n\n \n\nGoodwill is *not* amortized but is tested for impairment annually, or more frequently if events or circumstances indicate that it is more likely than *not* that the fair value of the reporting unit is less than its carrying amount. The Company performs its annual goodwill impairment assessment as of *December 31.*The goodwill impairment test compares the fair value of the reporting unit to which the goodwill is assigned to that reporting unit's carrying amount; if the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized for the excess, *not* to exceed the total amount of goodwill allocated to that reporting unit.\n\n \n\nBecause the JV was formed and goodwill was recognized on *September 30, 2025,*only *three* months prior to the *December 31, 2025*balance sheet date, and because there have *not* been any negative changes to the expected future cash flows or the primary assumptions impacting the fair value of the JV at the time of acquisition, the Company qualitatively concluded that the quantitative goodwill impairment test was unnecessary as of *December 31, 2025*and that no goodwill impairment exists as of the year then ended.\n\n \n\n**TERMINATION OF STRATEGIC ALLIANCE AGREEMENT AND PRE-EXISTING RELATIONSHIP**\n\n \n\nUpon entering into the JVOA on *September 30, 2025,*the SAA between the Company and Hover was simultaneously terminated. In accordance with ASC *805*-*10*-*55*-*21* through *55*-*28,* the Company evaluated whether the settlement of the pre-existing SAA relationship in connection with the business combination should be recognized as a separate transaction from the business combination itself, or whether it was effectively part of the exchange for the acquired business.\n\n \n\nAt the Transaction Date, the Company owed Hover approximately $5.2 million under the SAA. The costs associated with this payable represented capitalized costs associated with the Company’s funding of Hover's costs incurred under the SAA. Because these costs incurred related to the same Microgrid Projects that Hover contributed to the JV, the capitalized costs were subsumed into the fair value of the projects contributed by Hover (i.e., it became a component of the fair value of the net assets acquired).\n\n \n\nF-\n*21*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**7.**\n\n**Prepaid Expenses and Other Current Assets**\n\n \n\nPrepaid and other current assets generally consist of amounts paid to vendors for services that have *not* yet been performed and consist of the following:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nPrepaid expenses and other current assets\n $-  $131 \n\nTaxes recoverable\n  12   - \n\n**Total**\n $**12**  $**131** \n\n \n\n \n\n**8.**\n\n**Capitalized development cost and other long-term assets**\n\n \n\nCapitalized development costs are amounts paid to vendors that are related to the purchase and construction of solar energy facilities. Long-term prepaid expenses and other receivables consist of amounts owed to the Company as well as amounts paid to vendors for services that have yet to be received by the Company. Capitalized development costs and other long-term assets consisted of the following:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nCapitalized development costs\n $-  $4,775 \n\nLong-term prepaid expenses\n  518   518 \n\n**Total**\n $**518**  $**5,293** \n\n \n\nCapitalized development cost relates to various projects that are under development for the period. \n\n \n\nOn *September 30, 2025,*the Company entered into and closed a SPA and a JVOA with Hover, see Note *6.* As part of the transaction, $5.15 million of capitalized costs, consisting of costs associated with various microgrid projects in the UK and US, previously capitalized under the Company's SAA with Hover formed part of the consideration for the transaction (i.e., the costs were subsumed into the acquisition).  \n\n \n\nCapitalized development costs as of *December 31, 2024*consisted of $1.2 million of active development on customer-specific projects in the United States and $3.6 million in projects across Europe.\n\n \n\nLong-term Prepaid Expenses consist of estimated income tax payments made by Clean Earth prior to the business combination in *December 2023*which the Company believes are subject to refund.\n\n \n\n \n\n**9.**\n\n**Accounts Payable**\n\n \n\nAccounts payable represents the amounts owed to suppliers of goods and services the Company has consumed through operations. Accounts payable consist of the following:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nAccounts payable\n $6,621  $9,799 \n\n**Total**\n $**6,621**  $**9,799** \n\n \n\n \n\n**10.**\n\n**Accrued Liabilities**\n\n \n\nAccrued expenses relate to various accruals for the Company. Accrued interest represents the interest in debt *not* paid in the year ended *December 31, 2025*and *2024*. Accrued liabilities consist of the following:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nLegal fees\n $500  $500 \n\nInterest on debt\n  1,128   553 \n\nAudit Fees\n  436   500 \n\nPayroll\n  985   22 \n\nConsulting fees\n  140   140 \n\nTax penalties\n  590   590 \n\nOther expenses\n  -   66 \n\n**Total**\n $**3,779**  $**2,371** \n\n \n\nF-\n*22*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**11.**\n\n**Taxes Recoverable and Payable**\n\n \n\nTaxes recoverable and payable consist of VAT taxes payable and receivable from various European governments through group transactions in these countries. Taxes recoverable consist of the following:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nTaxes recoverable\n $12  $347 \n\nLess: Taxes payable\n  -   (14)\n\n**Total**\n $**12**  $**333** \n\n \n\n \n\n**12.**\n\n**Convertible Debt and Non-convertible Promissory Notes**\n\n \n\n**Convertible notes measured** **at fair value**\n\n \n\nThe following table reflects the Company's convertible notes measured at fair value under the ASC *825* fair value option (\"FVO\") election as of *December 31, 2025  *and *December 31, 2024.*\n\n \n\n  \n**2024**\n  \n**OID**\n   * *** **\n\n  \n**Convertible**\n  \n**Convertible**\n   * *** **\n\n  \n**Notes**\n  \n**Notes**\n  \n**Total**\n \n\n  \n**(in thousands)**\n \n\n**Balance at December 31, 2024**\n $**1,702**  $**-**   **1,702** \n\nReclass of accrued interest to convertible note\n  471   -   471 \n\nConversions\n  (2,336)  -   (2,336)\n\nNotes reclassified upon reevaluation of embedded features\n  -   1,975   1,975 \n\nLoss from extinguishment of debt\n  -   3,187   3,187 \n\nNew convertible notes issued at fair value\n  -   935   935 \n\nMovement in fair value\n  728   3,239   3,967 \n\n**Balance at December 31, 2025**\n $**565**  $**9,336**  $**9,900** \n\n \n\n*April*and *October 2024*Convertible Promissory Notes (the *\"2024* Convertible Notes\"):\n\n \n\nIn *April 2024,*the Company issued to an institutional investor a senior convertible note in the principal amount of $2,160,000, issued with an 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. This warrant was adjusted on *November 12, 2024, **December 5, 2024*and *September 2025,*and as a result, the warrant has been adjusted to purchase up to 1,360,755 shares of the Company’s common stock at an exercise price of $0.85 per share. Maxim Group LLC (“Maxim”) acted as placement agent for the Convertible Note issuance and also received a warrant to purchase 48 shares of common stock with an exercise price of $2,636 per share and which expires on *July 31, 2027,*for their role as placement agent. The Company also paid Maxim a cash placement agency fee of $140,000 and reimbursed certain out of pocket fees up to $50,000. 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,*which was extended to *December 31, 2025 (*unless accelerated due to an event of default or accelerated up to *six* installments by the Investor), bore interest at a rate of 7% per annum, which was adjusted in *April*of *2025* to 12% per annum, and 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 *July 18, 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*) $216,000 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 VWAPs (as defined in the Convertible Note) in the *ten* (*10*) trading days immediately prior to each conversion date and (y) $350. “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). The Convertible Note is convertible, at the option of the Investor, at any time, into such number of shares of Common Stock of the Company equal to the principal amount of the Convertible Note plus all accrued and unpaid interest at a conversion price, as adjusted, equal 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. (the “Conversion Price”). The Conversion Price is subject to full ratchet antidilution protection, subject to a floor conversion price, as adjusted, of $0.02 per share. The Convertible Note *may**not* be converted and shares of Common Stock *may**not* be issued under the Convertible Note if, after giving effect to the conversion or issuance, the Investor together with its affiliates would beneficially own in excess of 4.99% (or, upon election of the Investor, 9.99%) of the outstanding Common Stock. In addition to the beneficial ownership limitations in the Convertible Note, the sum of the number of shares of Common Stock that *may*be issued under that certain Purchase Agreement (including the Convertible Note and Warrant and Common Stock issued thereunder) is limited to 19.99% of the outstanding Common Stock as of *April 19, 2024 (*the “Exchange Cap”) unless shareholder approval (as defined in the Purchase Agreement) (“Stockholder Approval”) is obtained by the Company to issue more than the Exchange Cap. On *September 26, 2024*the Company’s shareholders approved the potential issuance of shares by the Company of more than the Exchange Cap. The Company adopted ASU *2020*-*06* as of *January 1, 2023.*This ASU removes the concepts of a beneficial conversion feature and cash conversion feature from the ASC guidance. The Company recorded a loss on debt issuance of $0.9 million. As of *December 31, 2024,*the outstanding principal was $0.4 million with fair value of $0.7 million at that date. The Company recorded a $0.6 million loss on movement in fair value for the year ended  *December 31, 2024.*\n\n \n\nF-\n*23*\n\n[Table of Contents](#toc)\n\n \n\nAs of *December 31, 2024,*$1.9 million of this note (including principal plus accrued interest and late fees and penalties) had been converted into 5,131 shares leaving $0.4 million of the note principal outstanding.\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* Convertible 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 $0.02. The maturity date of the *2024* Notes was 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, and as adjusted, 1,199,295 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), at an exercise price of $0.85 per share (the “Exercise Price”). 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. There have been *no* conversions for this note in the *twelve* months ended *December 31*, *2025.* The Company has principal outstanding on the note of $0.4 million as at *December 31, 2025.*\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 $400 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 1,064 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,**December 5, 2024*and in *September 2025,*such that the warrant was 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 VWAPs (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).\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, **December 5, 2024*and *September 2025,*such that as of *December 31, 2025*the warrant was adjusted to purchase up to 382,430 shares at an exercise price of $200 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 to Maxim for their role as placement agent, which is exercisable at any time on or after *April 21, 2025*and will expire on *December 19, 2027.*\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*and *September 2025*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\nAs of *December 31, 2024,*the outstanding principal was $2.2 million with fair value of $0.3 million at that date. The Company also recorded a $0.7 million loss on movement in fair value in the year ended *December 31, 2024.*\n\n \n\nIn *July*of *2025,* $39,710 of the notes (including principal plus accrued interest and late fees and penalties) was converted into 30,000 shares of common stock.  Also during the *three* and *nine* months ended *September 30, 2025 *a portion, $142,857, of the remaining balance left on these notes was purchased by a *third* party accredited investor (the “Assigned Convertible Note”), and a portion equal to $22,072, of the Assigned Convertible Note was converted into 32,190 shares of unrestricted common stock.\n\n \n\nDuring the *twelve* months ended *December 31, 2025,*given that the notes have materially the same terms and duration, the Company combined their presentation in the financial statements. During the *twelve* months ended *December **31,* *2025,* an aggregate of $2.3 million of the notes (including principal plus accrued interest and late fees and penalties) had been converted into 140,791 shares of common stock, leaving a principal outstanding amount of $0.7 million as of *December 31, 2025.*The Company recorded a $0.7 million loss on fair value movement for the *twelve* months ended *December 31, 2025.*\n\n \n\nF-\n*24*\n\n[Table of Contents](#toc)\n\n \n\nOID Convertible Notes\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, before deducting issuance costs of $145,000. 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”). The Secure Net Note Agreement was amended on *March 31, 2025,**April 22, 2025,**May 29, 2025, **June 30, 2025,**July 31, 2025*and *September 3, 2025.*The terms of each of those agreements *1*) increased the OID (increased to 60% as of *September **30,* *2025*), and *2*) extended the maturity date of the Note (matures on *April **5,* *2026* based on the most recent amendment).\n\n \n\nOn *May 29, 2025,*the Company entered into an additional Note Purchase Agreement (the “Purchase Agreement”), dated as of *May 29, 2025,*with an Secure Net Capital LLC (“Secure Net”) 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 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\nIn *September 2025,*the Company entered into *two* Note Purchase Agreements with *two* accredited investors (the “Investors”), pursuant to which the Company issued *two* 20% Original Issue Discount promissory convertible notes (the *“September 2025*Notes”) with a maturity date of *December 2025,*which were subsequently extended to *March*of *2026,* each in the principal sum of $312,500. Pursuant to the terms of the *September*Notes, the Company agreed to pay to the Investors the entire principal amount on the Maturity Date, failing which and certain events of default (as described in the *September 2025*Notes), the *20%* Original Issue Discount shall increase 5% each month thereafter until the *September 2025*Notes are fully repaid. The Purchase Agreements resulted in total net proceeds of $500,000 to the Company, which the Company is using for working capital purposes. The *September 2025*Notes are 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 calculated based on the *3* Trading Days immediately prior to the date of such conversion) as of the date of conversion.  The Company has recorded $625,000 due at *December 31*, *2025,* being cash received of $500,000 and debt issuance costs capitalized of $125,000. The debt issuance costs are amortized over the life of the *September 2025*Notes, of which $6,651 are expensed in the income statement for the period ended *December **31,* *2025.*  The Maturity Dates of the *September 2025*Notes have been subsequently extended on a monthly basis to *March 2026.*\n\n \n\n*OID Convertible Notes Modification, Extinguishment and Fair Value Election*\n\n \n\nIn connection with the Company’s OID Convertible Notes and other convertible debt with similar terms (the “OID Convertible Notes”), the Company evaluated the accounting implications of modifications or amendments executed during the *twelve* months ended *December 31, **2025.*\n\n \n\n*Original Terms*\n\n \n\nThe OID Convertible Notes were originally issued with a stated maturity and included and original issue discount (“OID”) of *20%* which was accreted to interest expense using the effective interest method through the quarterly period ended *June 30, 2025.*\n\n \n\n*Modification and Extension Feature*\n\n \n\nDuring the *third* quarter of *2025,* the terms were modified to provide the Company with an option to extend the maturity date on a month-to-month basis for a cost of an additional *5%* increase to the OID for each month that repayment goes beyond the stated maturity and this extension option continues for an undefined number of additional months. The Company evaluated this modification under ASC *470*-*50,* *Debt Modifications and Extinguishments.*   \n\n \n\nThe Company’s evaluation revealed that the change in the present value of the cash flows associated with the modified instrument, as compared to the remaining cash flows under the original terms, was substantial. Accordingly, the amendment was accounted for as a debt extinguishment as of *July 1, 2025.*\n\n \n\n*Embedded Derivative Evaluation*\n\n \n\nIn connection with the modification, the Company also determined that change in the potential economics associated with the extension feature combined with the holder’s conversion right needed to be reassessed to determine if the embedded features were derivatives requiring bifurcation and separate accounting under ASC *815*-*15,* *Derivatives and Hedging*—*Embedded Derivatives*. Upon reassessment, it was determined that the newly introduced extension feature combined with the holder’s conversion right has the potential to create economic returns for the holder that are *not* clearly and closely related to the host debt instrument was determined to be a derivative requiring bifurcation and separate accounting as a liability at fair value, with subsequent changes in fair value recognized in earnings.\n\n \n\nF-\n*25*\n\n[Table of Contents](#toc)\n\n \n\n*Fair Value Option Election*\n\n \n\nBecause the modification resulted in the introduction of an embedded derivative that would otherwise require bifurcation, the Company elected, pursuant to ASC *825*-*10,* to apply the fair value option (“FVO”) to each of the OID Convertible Notes impacted by the incorporation of the Company option to extend maturity.\n\n \n\nAs a result of this election, the OID Convertible Notes are accounted for as a single hybrid instrument measured at fair value, with changes in fair value recognized in earnings each reporting period. The Company determined that the FVO election eliminates the requirement to separately account for the embedded derivative under ASC *815.*\n\n \n\n*Extinguishment Accounting*\n\n \n\nThe extinguishment was accounted for by comparing (i) the carrying amount of the OID Convertible Notes immediately prior to the modification, consisting of the outstanding principal amount less unamortized OID, to (ii) the fair value of the modified OID Convertible Notes on the modification date.\n\n \n\nThe Company recognized a loss on extinguishment of $3.2 million during the *twelve* months ended *December 31, 2025,*representing the excess of the fair value of the modified OID Convertible Note instruments over the carrying amount of the related convertible debt on *July 1, 2025 (*the date of the modification).\n\n \n\n*Subsequent Fair Value Changes*\n\n \n\nFollowing the modification and the election of the fair value option, the OID Convertible Notes are remeasured at fair value at each reporting date in accordance with ASC *820,* *Fair Value Measurement*.\n\n \n\nFor the period from *July 1, 2025*through *December 31*, *2025,* the Company recognized a loss of $1.4 million related to changes in the fair value of the OID Convertible Notes, which is included in “change in fair value of financial instruments” within the consolidated statements of operations.\n\n \n\n*Valuation Methodology*\n\n \n\nThe fair value of the OID Convertible Notes reflects the present value of expected future cash flows, incorporating the impact of the extension feature and the increasing OID structure, as well as market participant assumptions regarding discount rates, credit risk, and expected timing of repayment. The valuation requires significant judgment and is classified within Level *3* of the fair value hierarchy.\n\n \n\n*Valuation Inputs and Assumptions*\n\n \n\nThe fair value of the OID Convertible Notes was determined using a probability-weighted discounted cash flow model that incorporates the economic effects of the extension feature, including the increasing OID structure.\n\n \n\nSignificant unobservable inputs include:\n\n \n\n \n●\n\nExpected timing of repayment - estimated *March 31, 2026*repayment date\n\n \n\n \n●\n\nDiscount rate - consistent with the 45% OID realized by the investor/holder over the period the Notes were outstanding prior to the re-evaluation under ASC *815.*\n\n \n\n*Sensitivity Analysis*\n\n \n\nBecause the valuation of the OID Convertible Notes utilizes significant unobservable inputs, the resulting fair value is inherently subjective. Changes in these inputs could result in materially different fair value measurements\n\n \n\n \n●\n\nDiscount Rate: An increase in the discount rate would generally result in a decrease in the fair value of the Convertible Notes, while a decrease in the discount rate would result in an increase in fair value.\n\n \n\n \n●\n\nExpected Term / Extension Assumptions: An increase in the expected duration of the instrument, including the likelihood of extension elections that increase OID, would generally result in an increase in the fair value of the Convertible Notes.\n\n \n\nThe Company notes that these inputs are interrelated, and changes in *one* input *may*be accompanied by changes in others. Accordingly, the sensitivity analysis above is provided for illustrative purposes and *may**not* be indicative of actual future changes in fair value.\n\n \n\n*Credit Risk Attribution* \n\n \n\nThe Company determined that *no* material portion of the change in fair value during the *three* months ended *December 31*, *2025* was attributable to changes in instrument-specific credit risk. The change in fair value was primarily driven by changes in expected cash flows associated with the extension feature, including the increasing OID structure, and the passage of time.\n\n \n\nF-\n*26*\n\n[Table of Contents](#toc)\n\n \n\n**Convertible and non-convertible promissory notes, net of debt issuance costs**\n\n \n\nThe following table reflects the Company's convertible and non-convertible promissory notes, net of related discounts as of *December 31, 2025 *and *December 31, 2024:*\n\n \n\n  \n**As of**\n  \n**As of**\n \n\n  \n**December 31,**\n  \n**December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nTerm loans\n  6,161   27,719 \n\n**Gross convertible and non-convertible notes**\n  **6,161**   **27,719** \n\nDebt discount\n $-  $(1,239)\n\n**Total convertible and non-convertible notes, net**\n  **6,161**   **26,480** \n\nCurrent Maturities net of debt discount\n $(6,161) $(24,851)\n\n**Long-term maturities net of debt discount**\n $**-**  $**1,629** \n\n \n\nThe Company’s remaining debt is recorded net of debt issuance costs of $0.0 million as of *December 31, 2025 *and *December 31, 2024,*respectively. Debt issuance costs are recorded as a debt discount and amortized to interest expense over the life of the debt, upon the close of the related debt transaction, in the Consolidated Balance Sheet. Interest expense stemming from amortization of debt discounts for continuing operations for the *twelve* months ended *December 31, 2025*and *2024* was $2.0 million. \n\n \n\nThere was no interest expense stemming from amortization of debt discounts for discontinued operations for the *twelve* months ended *December 31, 2025 *and for the year ended *2024,* respectively.\n\n \n\nTerm Loans:\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, 2024,*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 year ended *December 31, 2024,*$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 buyers. See Footnote *16* for more information. The Company had principal outstanding of $16.5 million and $17.6 million as of *May 7, 2025*and *December **31,* *2024,* respectively. There is *no* balance due by the Company on this following the sale.\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 $2.7 million and $2.7 million as of *March 25, 2025*and *December 31, 2024,*respectively. There is *no* balance due by the Company on this following the sale.\n\n \n\nIn *October 2023,*Alternus Energy Americas, *one* of the Company’s prior US subsidiaries secured a working capital loan in the amount of $3.2 million with a 0% interest until a specified date and a maturity date of *March 31, 2024.*In *February 2024,*the loan was further extended to *February 28, 2025,*and the principal amount was increased to $3.6 million as compensation for the extension. The compensation was charged as interest costs in the Consolidated Statement of Operations and Other Comprehensive Income/(Loss) during the period. Additionally, on *February 5, 2024,*the Company issued the noteholder warrants to purchase up to 18 shares of restricted common stock, exercisable at $50 per share having a 5-year term and fair value of $86 thousand. In *March 2024,*The Company repaid $1.8 million in cash against the principal. Subsequently, on *November 5, 2024,*the Company sold Alternus Energy Americas to Alternus Energy Group plc, a related party. Prior to the transaction, Alternus Energy Americas assigned this note to the Company directly. On *December 31, 2025*the lender converted the principal balance into 2,750 Series C Convertible Preferred Shares. The Company recorded a $0.95 million loss on settlement of debt relating to the transaction. The note had a zero principal balance outstanding as at  *December 31, 2025*and $1.8 million as at *December 31, 2024,*respectively.\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. On *July 10, 2025*SCAF was granted a motion of summary judgment for $1.6 million due under a settlement agreement, plus accrued interest to date and attorney’s fees. The Company has recorded  $1.9 million in principal, accrued interest and fees on this note as at *December 31, 2025. *\n\n \n\nOn *December 11, 2024,*BESS LLC, a wholly owned subsidiary of the Company, issued a non-interest-bearing promissory note with a principal amount of $2,000,000 as partial consideration in the Asset Purchase Agreement for the acquisition of LiiON LLC’s battery storage business. The note was issued with a maturity date of *December 31, 2027.*Pursuant to the requirements of ASC *805,* the Note was originally recorded at its fair value of $1,537,000 (see Footnote *5*) and included as partial consideration for the net assets acquired in the acquisition. On *May 1, 2025*this Note was cancelled in full as part of the LiiON Rescission (See Footnote *5*).\n\n \n\nF-\n*27*\n\n[Table of Contents](#toc)\n\n \n\nOn *December 30, 2024,**one* of the Company’s subsidiaries, Alternus Europe Ltd, assumed a €1,000,000 ($1,041,720) promissory note from a subsidiary of AEG, Alternus Fund Co Ltd, with a 120% repayment premium plus 10% accrued interest maturing *July 31, 2025.*This note has *not* been repaid and is therefore currently in default. However, this note is part of the settlement entered into with SPC in *April*of *2025* (See Footnote *14* - Commitments). Additionally, on *December 31, 2024*the Company assumed multiple promissory notes totalling $1.1 million from AEG maturing *June 30, 2025*which were extended to the earlier of *September 30, 2026*or the date the Company closes an equity financing of a minimum of $5 million.  In *April*of *2025* the Company assumed *two* additional promissory notes totaling $250,000 from AEG maturing on *July 31, 2025*which were extended to *March 31, 2026.*\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 was offset to debt issuance costs (Interest Expense) on the Consolidated Statement of Operations and Comprehensive Income/(Loss).\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”). The 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). The 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. The Company has recorded $0.8 million in the financial statements to include the original issue discount and loss on debt issuance and has accrued $101,097 in default interest for the *twelve* months ended *December 31*, *2025.* Maxim 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\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. The Company has recorded $498,000 due at *December 31*, *2025,* being cash received of $445,000 and debt issuance costs capitalized of $83,000. The debt issuance costs are amortized over the life of the loan, of which $39,082 are expensed in the income statement for the period ended *December 31, 2025.*\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. The Company has recorded $240,000 principal due at *December 31*, *2025,* being cash received of $200,000 and debt issuance costs capitalized of $40,000. The debt issuance costs are amortized over the life of the loan, of which $16,640 are expensed in the income statement for the period ended *December 31, 2025.*\n\n \n\nOn *August 7, 2025,*the Company issued a promissory note to an accredited investor in the aggregate total principal amount of $144,000, having a 16.67% original issue discount, an interest rate of 12% per annum and a maturity date of *August 30, 2025 (*the “Note”). The Company received gross proceeds of $120,000, before fees and other expenses associated with the transaction.  The Company has recorded $144,000 due at *December 31, 2025,*being cash received of $120,000 and debt issuance costs capitalized of $7,008. The debt issuance costs are amortized over the life of the loan, of which $24,000 are expensed in the income statement for the period ended *December 31, 2025.  *The Note has *not* been repaid and is therefore currently in default. The parties are currently in discussions regarding an extension of this Note.\n\n \n\n \n\n**13.**\n\n**Other Liabilities**\n\n \n\nThe other liabilities amount includes $1.4 million due to Hover, a related party, and $5.7 million due to Sunrise Development LLC a former supplier of project development services to certain subsidiaries then owned by the Company that was granted an arbitration award against the Company. It also includes approximately $0.4 million to reflect a liability to Morgan Franklin Consulting LLC resulting from litigation. (See Footnote *15*).\n\n \n\n \n\n**14.**\n\n**Leases**\n\n \n\nThe Company determines if an arrangement is a lease or contains a lease at inception or acquisition when the Company acquires a new park. Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As most of the Company’s leases do *not* provide an implicit rate, the Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. Lease expense related to the net present value of payments is recognized on a straight-line basis over the lease term.\n\n \n\nF-\n*28*\n\n[Table of Contents](#toc)\n\n \n\nThe key components of the company’s operating leases were as follows (in thousands):\n\n \n\n  \n**December 31,**\n  \n**December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\nOperating Lease - Operating Cash Flows (Fixed Payments)\n  -   - \n\nOperating Lease - Operating Cash Flows (Liability Reduction)\n  -   43 \n\n         \n\nNew ROU Assets - Operating Leases\n  -   - \n\n         \n\nWeighted Average Lease Term - Operating Leases (years)\n  *-*   34.05 \n\nWeighted Average Discount Rate - Operating Leases\n  *—*%  9.3%\n\n \n\nDuring the year *2024,* the Company’s operating leases generally relate to the rent of office building space, as well as land and rooftops upon which the Company’s solar parks are built. These leases included those that had been assumed in connection with the Company’s asset acquisitions and business combinations. The Company’s leases were for varying terms and had expiration  between *2027* and *2055.*\n\n \n\nIn *October 2023,*the Company entered a new lease for land in Madrid, Spain where solar parks are planned to be built, with a term of 35 years and an estimated annual cost of $32,000. The Company impaired the asset as of *December 31, 2025*, but there was *no* impairment on the lease due to the Company still owned the lease obligation as at *December 31, 2024.*In *March*of *2025,* the Spanish SPV's were sold to AEG for a nominal value and were de-consolidated from the group. See footnote *18* for sale information.\n\n \n\nOn *November 5, 2024,*the Company sold Alternus Energy Americas Inc. to AEG. The United States office lease was part of the deconsolidation, with $126,000 incurred as lease expense before that date.\n\n \n\nThe Company had *no* finance leases as of *December 31, 2025*and *2024*\n\n \n\n \n\n**15.**\n\n**Commitments and Contingencies**\n\n \n\n**Litigation**\n\n \n\nThe Company recognizes a liability for loss contingencies when it believes it is probable a liability has occurred, and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When *no* amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company has established an accrual for those legal proceedings and regulatory matters for which a loss is both probable and the amount can be reasonably estimated.\n\n \n\nFrom time to time, the Company *may*become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters *may*arise from time to time that *may*harm the Company’s business. Other than the following matters, we are *not* aware of any such legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.\n\n \n\nOn *October 15, 2024*Sunrise requested a hearing be scheduled in binding arbitration against the Company, *two* of its former indirect wholly owned subsidiaries, ALT US *03* and ALT US *04,* and AEG, to be conducted in Minneapolis, MN in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA”), claiming that approximately $5 million is due and owed to Sunrise pursuant to a settlement agreement by and among the parties, plus costs, expenses, legal fees and interest. On or about *February 6, 2025,*the Company entered into a *second* set of settlement terms with Sunrise, pursuant to which the Company agreed to make certain monthly payments to Sunrise, related to amounts allegedly owed by *one* of the Company’s former subsidiaries pursuant to a share purchase agreement, and in exchange Sunrise dismissed its arbitration case against the Company. As of *March 10, 2025,*the Company breached its payment obligations under the settlement terms, and on *June 18, 2025*an arbitration award of $5.7 million was granted to Sunrise. The Company has accrued a liability for this loss contingency in the amount of approximately $5.7 million in other payables in the financial statements.  The parties are currently in further settlement discussions and have agreed commercial terms in principle. \n\n \n\nOn *January 30, 2025*CFGI LLC filed a complaint in the Superior Court of Massachusetts, claiming $358,000 is due and owed to CFGI pursuant to a services agreement by and among the parties, plus fees and costs.  CFGI and the Company entered into a settlement agreement for the contractual amount owed for services rendered in the amount of $358,000, whereby the Company agreed to pay to CFGI approximately $10,000 per month commencing *June 2, 2025*for a period of *three* years.  The Company has failed to make all but *one* of the payments and on *May 6, 2026*CFGI filed a request for default judgment in the amount of $358,000 and on *June 4, 2026*the request was granted.  The Company has accrued a liability for this loss contingency in the amount of approximately $358,000 in other payables in the financial statements, which represents the amount owed less the *one* $10,000 payment made, plus fees and costs of approximately $10,000.\n\n \n\nOn *March 11, 2025,*the Company was served a complaint filed in the Superior Court of the State of Delaware by SPAC Sponsor Capital Access (“SCAF”), claiming that approximately $1.5 million is due and owed to SCAF pursuant to a settlement agreement by and among the parties, plus costs, expenses, legal fees, interest and damages, if proven. On *July 10, 2025*the Company was notified that the Superior Court of the State of Delaware granted a motion of summary judgment for $1.5 million due under a settlement agreement, plus interest to date in the amount of approximately $225,000, plus attorney’s fees of approximately $26,000. The Company has accrued a liability for this loss contingency in the amount of approximately $2.0 million at *December 31, 2025 *which represents the contractual amount allegedly owed plus legal costs and accrued interest. It is reasonably possible that the potential loss *may*exceed our accrued liability due to costs, expenses, legal fees, interest and damages that are also alleged by SCAF as owed. The parties are currently in further settlement discussions.\n\n \n\nOn *May 8, 2025,*the Company, AEG and *one* of AEG’s subsidiaries, Alternus Energy Americas Inc. (AEA), was served a Demand for Arbitration through JAMS in Washington DC by Orrick, Herrington and Sutcliffe LLP (“Orrick”), claiming that approximately $1 million is due and owed to Orrick pursuant to an engagement agreement entered into with AEA, plus interest. In *February*of *2026,* Orrick withdrew its claims, and the arbitration was discontinued.  Orrick has threatened to commence an action in state court against the Company and AEG and AEA, but to the Company's knowledge, *no* such action has been commenced.  If an action is commenced, the Company intends to vigorously defend itself in this matter and intends to file a motion to dismiss itself from the arbitration as the Company was *not* a party to this engagement agreement, nor is AEA a subsidiary of the Company.\n\n \n\nF-\n*29*\n\n \n\n \n\nOn *May 30, 2024,*the Company was served a complaint filed in the Circuit Court for Fairfax County, Virginia, by Morgan Franklin Consulting LLC (\"MF\"), claiming $276,796 is due and owed to MF pursuant to a Master Services Agreement by and among the parties.  In *October*of *2024,* MF and the Company entered into a settlement agreement for the contractual amount owed for services rendered through the payment of *twelve* equal monthly installments commencing immediately, but the Company failed to make any payments.  On *September 22, 2025,*the Court granted summary judgment to MF for the amount claimed as owed. Subsequently, on *February 6, 2026*the Court granted MF's motion for late fees in the amount of $153,949.  The Company has accrued a liability for this award in the amount of approximately $430,746 at *December 31, 2025 *which re\n\npresents the contractual amount owed plus late fees.  The parties are currently in payment plan discussions.\n\n \n\n \n\n**Commitments**\n\n \n\nOn *April 28, 2025,*the Company entered into a Settlement Agreement and Stipulation (the “Agreement”) with Southern Point Capital Corporation (“SPC”), pursuant to which the Company agreed to issue Common Stock to SPC in exchange for the settlement of an aggregate of $4,242,964 (the “Settlement Amount”) to resolve outstanding overdue liabilities with different vendors. On *May 1, 2025,*the Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida (the “Court”), entered an order (the “Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section *3*(a)(*10*) of the Securities Act in accordance with a stipulation of settlement, pursuant to the Agreement between the Company and SPC. SPC commenced action against the Company to recover the Settlement Amount of past-due obligations and accounts payable of the Company (the “Claim”), which SPC had purchased from certain vendors of the Company pursuant to the terms of separate receivable purchase agreements between SPC and each of such vendors. The Order provides for the full and final settlement of the Claim and the related action. The Agreement became effective and binding upon execution of the Order by the Court on *April 30, 2025.*Pursuant to the terms of the Agreement approved by the Order, the Company agreed to issue to SPC shares (the “Settlement Shares”) of the Company’s Common Stock. The Settlement Agreement provides that the Settlement Shares will be issued in *one* or more tranches, as necessary, sufficient to satisfy the Settlement Amount through the issuance of securities issued pursuant to Section *3*(a)(*10*) of the Securities Act. Pursuant to the Agreement, SPC *may*deliver requests to the Company for additional shares of Common Stock to be issued to SPC until the Settlement Amount is paid in full, provided that any excess shares issued to SPC will be cancelled.\n\n \n\nIn connection with the Agreement, on *May 2, 2025,*the Company issued 20,000 shares of Common Stock to SPC as a settlement fee. The issuance of Common Stock to SPC pursuant to the terms of the Agreement approved by the Order is exempt from the registration requirements of the Securities Act pursuant to Section *3*(a)(*10*) thereof, as an issuance of securities in exchange for bona fide outstanding claims, where the terms and conditions of such issuance are approved by a court after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear. The Agreement provides that in *no* event will the number of shares of Common Stock issued to SPC or its designee in connection with the Agreement, when aggregated with all other shares of Common Stock then beneficially owned by SPC and its affiliates (as calculated pursuant to Section *13*(d) of the Securities Exchange Act of *1934,* as amended (the “Exchange Act”), and the rules and regulations thereunder), result in the beneficial ownership by SPC and its affiliates (as calculated pursuant to Section *13*(d) of the Exchange Act and the rules and regulations thereunder) at any time of more than 9.99% of the Common Stock. The Company recorded $172,000 in other expense in the financial statements at *December 31, 2025,*which represents the value of the 20,000 shares issued as the settlement fee.\n\n \n\nThe Company determined that the Agreement represents a financial instrument that requires the Company to settle a fixed monetary amount by issuing a variable number of shares of its common stock. As a result, the Company is required to account for the Agreement as a liability at fair value with periodic changes in fair value recorded through earnings until the liability has been settled through the issuance of shares (i.e., in *one* or more tranches) that yield SPC cumulative cash receipts equal to the Settlement Amount. The fair value of this liability as of *December 31, 2025 *was $4,242,963 and has been recorded as within Accounts Payable in the Company’s consolidated balance sheet.\n\n \n\n**Contingencies**\n\n \n\n*Guarantee of MH02 Note*\n\n \n\nIn connection with the Company’s prior ownership of AEG *MH02* Ltd. (*“MH02”*), the Company guaranteed a *third*-party loan (the “Note”) with an outstanding principal balance of €15.4 million ($17.4 million) as of as of *May 7, 2025*and interest under the Note continues to accrue as between the relevant obligor and lender. On *May 7, 2025,*the Company completed the sale of *MH02* to the lender and an additional *third* party (the “Buyers”). As part of the sale transaction, the lender agreed to a standstill arrangement (the “Standstill”), pursuant to which it will forbear from exercising its rights to repayment, including any remedies upon default, until such time as all solar photovoltaic projects owned by *MH02* and its subsidiaries (the “Projects”) have reached ready-to-build (“RTB”) status and have subsequently been sold. Under the terms of the sale agreement, as each Project achieves RTB status, the Company (or *one* of its affiliates) has the option, but *not* the obligation, to purchase such Project at its market value, subject to a minimum price of €150,000 (approximately $174,000 USD as of *December 31, 2025)*per megawatt. This option is exercisable for a period of *30* days following notification that a Project has reached RTB status. If the Company does *not* exercise its option within that period, the Buyers *may*sell the Project to a *third* party.\n\n \n\nThe Company’s guarantee of the Note remains in effect following the sale of *MH02.* While the Standstill delays the lender’s ability to demand repayment, it does *not* extinguish the underlying obligation or the Company’s guarantee. The timing and amount of any potential payments under the guarantee are dependent on several factors, including the successful development of the Projects to RTB status, the ultimate sale proceeds realized for such Projects, and the resolution of the outstanding balance under the Note. As of *December 31, 2025,*the Company evaluated its guarantee under applicable accounting guidance for guarantees and contingencies. Based on the information currently available, including the status of the Projects and expected future development and disposition plans, the Company has *not* recorded a liability related to this guarantee. The Company has currently determined that a loss resulting from the guarantee is remote. The Company monitors developments related to the Projects and the Note and will adjust its assessment of the guarantee obligation as additional information becomes available.\n\n \n\n \n\n**16.**\n\n**Development Cost**\n\n \n\nInitial costs incurred in project development are capitalized and held on the balance sheet. The Company regularly reviews the status of these projects with our development partners and can decide to abandon a project if it becomes uneconomic due to various factors, for example, a change in market conditions leading to higher costs of construction, lower energy rates, political factors or otherwise where 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, or other factors that change the expected returns on the project. Any reductions or modifications to, or the elimination of, governmental incentives, such as the renewable energy tax credits in the US, 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. In such an event that Company believes that a capitalized project is *no* longer viable, then the associated costs are written of as development cost in the income statement. There have been *no* cancellations of currently capitalized projects in the financial statements as of *December 31, 2025 *and the Company accounted for $748,000 in development costs for the *twelve* months ended *December 31, **2024.*\n\n \n\nF-\n*30*\n\n \n\n \n\nMiscellaneous development cost relates to cost associated with projects abandoned during various phases, due to lack of technical, legal, or financial feasibility are immediately expensed to development costs.\n\n \n\n**17.**\n\n**Discontinued Operations Sold - Poland, Netherlands, Solis and subsidiaries in Romania**\n\n \n\nIn *July 2023,*the Company engaged multiple parties to market the Polish and Netherlands assets to potential buyers. In the *fourth* quarter of *2023,* the Company decided to proceed with the sales of the six PV parks in Poland and one park in the Netherlands. As the exit of these *two* markets represented a strategic shift for the Company, the assets were classified as discontinued operations in accordance with ASC *205*-*20.* As of *December 31, 2023,*the Polish and Netherlands assets were classified as disposal groups held for sale. The balances and results of the Polish and Netherlands disposal groups are presented below.\n\n \n\nThe sale of the Polish assets was finalized *January 19, 2024*with a cash consideration of $59.4 million for all operating assets. In accordance with ASC *360,* the company removed the disposal group and recognized a gain of $3.4 million upon the sale, of which $0.8 million were costs associated with the sale.\n\n \n\nThe sale of the Netherlands assets was finalized *February 21, 2024*with a cash consideration of $7.1 million for all operating assets. In accordance with ASC *360,* the company removed the disposal group and recognized a loss of $1.3 million upon the sale, of which $0.5 million were costs associated with the sale.\n\n \n\n  \n**As of**\n \n\n  \n**January 19**\n \n\n**Poland**\n \n**2024**\n \n\n  \n**(in thousands)**\n \n\nAssets:\n    \n\nCash & cash equivalents\n $630 \n\nOther current assets\n  442 \n\nProperty, plant, and equipment, net\n  63,107 \n\nOperating leases, non-current - assets\n  5,923 \n\nTotal discontinued operations assets\n $70,102 \n\n     \n\nLiabilities:\n    \n\nAccounts payable\n $2,933 \n\nOperating leases, current – liabilities\n  281 \n\nOther current liabilities\n  25 \n\nOperating leases, non-current - liabilities\n  5,798 \n\nOther non-current liabilities\n  985 \n\nTotal discontinued operations liabilities\n $10,022 \n\n     \n\n**Net assets/(liabilities) of discontinued operations**\n **$****60,080** \n\n \n\n  \n**Year Ended December 31,**\n \n\n**Poland**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n         \n\n**Revenues**\n $-  $106 \n\n         \n\n**Operating Expenses**\n   ** **   ** **\n\nCost of revenues\n  -   (101)\n\nDepreciation, amortization, and accretion\n  -   (123)\n\nGain/(loss on disposal of asset)\n  -   3,484 \n\n**Total operating expenses**\n  -   3,260 \n\n         \n\n**Income from discontinued operations**\n  -   3,366 \n\n         \n\n**Other income/(expense):**\n   ** **   ** **\n\nImpairment loss recognized on the remeasurement to fair value less costs to sell\n  -   - \n\nInterest expense\n  -   (688)\n\nOther expense\n  -   - \n\nTotal other expenses\n $-  $(688)\n\nIncome/(Loss) before provision for income taxes\n $-  $2,678 \n\nIncome taxes\n $-  $- \n\n**Net income/(loss) from discontinued operations**\n $**-**  $**2,678**** **\n\n \n\nF-\n*31*\n\n[Table of Contents](#toc)\n\n \n\nImmediately before the classification of the disposal groups as discontinued operations, the recoverable amount was estimated for certain items of property, plant, and equipment and impairment loss was identified. Following the classification, a write-down of ($11.8) million was recognized on *December 31, 2023*to reduce the carrying amount of the assets in the disposal group to their fair value less costs to sell. This was recognized in discontinued operations in the statement of profit or loss. Fair value measurement disclosures are provided in Footnote *4.* \n\n \n\n  \n**As of**\n \n\n  \n**February 21,**\n \n\n**Netherlands**\n \n**2024**\n \n\n  \n**(in thousands)**\n \n\nAssets:\n    \n\nCash & cash equivalents\n $75 \n\nAccounts receivable, net\n  - \n\nOther current assets\n  178 \n\nProperty, plant, and equipment, net\n  7,669 \n\nOperating leases, non-current – assets\n  1,441 \n\nOther non-current assets\n  1,192 \n\nTotal discontinued operations assets\n $10,555 \n\n     \n\nLiabilities:\n    \n\nAccounts payable\n $945 \n\nOperating leases, current – liabilities\n  55 \n\nOther current liabilities\n  95 \n\nOperating leases, non-current – liabilities\n  1,273 \n\nTotal discontinued operations liabilities\n $2,368 \n\n     \n\n**Net assets/(liabilities) of discontinued operations**\n **$****8,187** \n\n \n\n  \n**Year Ended December 31,**\n \n\n**Netherlands**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n         \n\n**Revenues**\n $-  $16 \n\n         \n\n**Operating Expenses**\n   ** **   ** **\n\nCost of revenues\n  -   (115)\n\nDepreciation, amortization, and accretion\n  -   (57)\n\nLoss on disposal of asset\n  -   (1,187)\n\n**Total operating expenses**\n  -   (1,359)\n\n         \n\n**Income from discontinued operations**\n  -   (1,343)\n\n         \n\n**Other income/(expense):**\n   ** **   ** **\n\nInterest expense\n  -   (113)\n\nOther expense\n  -   - \n\nTotal other expenses\n $-  $(113)\n\nIncome/(Loss) before provision for income taxes\n $-  $(1,456)\n\nIncome taxes\n  -   - \n\n**Net income/(loss) from discontinued operations**\n $**-**** ** $**(1,456**)\n\n \n\nImmediately before the classification of the disposal groups as discontinued operations, the recoverable amount was estimated for certain items of property, plant, and equipment and *no* impairment loss was identified. As of *December 31, 2023,*there were *no* further write-downs as the carrying amounts of the disposal groups did *not* fall below their fair value less costs to sell.\n\n \n\nOn *October 3, 2024,*the Company completed the sale of Solis Bond Company DAC, a company formed under the laws of Ireland and an indirect wholly owned subsidiary of the Company, and its subsidiaries in Romania to Solis Trustee Special Vehicle Limited, the Solis Bondholders’ ownership vehicle, for €1 in accordance with the terms of the Solis Bonds, as amended. As a result of the sale, the Company eliminated approximately $112 million in debt and payables related to Solis activities and improved shareholders’ equity by approximately $51 million. Solis accounted for 98% of group revenues for the years ended *December 31, 2024.*\n\n \n\nF-\n*32*\n\n[Table of Contents](#toc)\n\n \n\nThe sale of these entities and exit of this market represented a strategic shift for the Company that has a major effect on the Company’s operations and financial results. Results of operations, financial position, and cash flows for these subsidiaries are reported as discontinued operations, in accordance with ASC *205*-*20,* for all periods presented. The notes to the financial statements have been adjusted to reflect this retroactive presentation.\n\n \n\n  \n**As of**\n \n\n  \n**October 3**\n \n\n**Solis and Subsidiaries in Romania**\n \n**2024**\n \n\n  \n**(in thousands)**\n \n\nAssets:\n    \n\nCash & cash equivalents\n $632 \n\nRestricted cash\n  5 \n\nAccounts receivable, net\n  952 \n\nUnbilled energy incentives\n  8,778 \n\nOther current assets\n  9,580 \n\nProperty, plant, equipment, net\n  41,457 \n\nOperating leases, non-current assets\n  159 \n\nTotal discontinued operations assets\n $61,563 \n\n     \n\nLiabilities:\n    \n\nAccounts payable\n $2,812 \n\nGreen bonds\n  87,627 \n\nDeferred income\n  8,778 \n\nOperating leases, current liabilities\n  46 \n\nOther current liabilities\n  13,260 \n\nOperating leases, non-current liabilities\n  118 \n\nOther non-current liabilities\n  202 \n\nTotal discontinued operations liabilities\n $112,843 \n\n     \n\n**Net assets/(liabilities) of discontinued operations**\n **$****(51,280****)**\n\n \n\n  \n**Year Ended**\n \n\n  \n**December 31,**\n \n\n**Solis and Subsidiaries in Romania**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n         \n\n**Revenues**\n $-  $9,687 \n\n         \n\n**Operating Expenses**\n   ** **   ** **\n\nCost of revenues\n  -   (3,936)\n\nSelling, general, and administrative\n  -   (1,564)\n\nDepreciation, amortization, and accretion\n  -   (1,511)\n\nDevelopment costs\n  -   - \n\nCosts related to disposal of asset\n  -   (730)\n\nGain on sale of discontinued operations, net assets\n  -   51,931 \n\n**Total operating expenses**\n  -   44,190 \n\n         \n\n**Income from discontinued operations**\n  -   53,876 \n\n         \n\n**Other income/(expense):**\n   ** **   ** **\n\nInterest expense\n  -   (8,924)\n\nSolis bond waiver fee\n  -   - \n\nOther expense\n  -   (221)\n\nTotal other expenses\n $-  $(9,145)\n\nIncome/(Loss) before provision for income taxes\n $-  $44,731 \n\nIncome taxes\n  -   (87)\n\n**Net income/(loss) from discontinued operations**\n $**-**  $**44,644**** **\n\n \n\nF-\n*33*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**18.**\n\n**Sale of Spanish Subsidiaries**\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 $3.5 million upon closing the sale in *March 2025,*of which $0.6 million were costs associated with the sale. The sale of the Company’s Spanish subsidiaries does *not* represent a discontinued operation because management continues to pursue clean energy investment and development opportunities in Spain and Europe and does *not* view the sale as a strategic shift for the Company.\n\n \n\nThe major classes of assets and liabilities transferred on *March 25, 2025*in the sale of the Company’s subsidiaries are shown below:\n\n \n\n  \n**As of**\n \n\n  \n**March 25,**\n \n\n**Spain**\n \n**2025**\n \n\n  \n**(in thousands)**\n \n\n     \n\nAssets:\n    \n\nOther current assets\n $36 \n\nTotal assets sold\n $36 \n\n     \n\nLiabilities:\n    \n\nAccounts payable\n $196 \n\nShort secured debt\n  2,773 \n\nOperating leases, current liabilities\n  29 \n\nOther current liabilities\n  203 \n\nOperating leases, non-current liabilities\n  423 \n\nTotal liabilities sold\n $3,624 \n\n     \n\n**Net (gain)/loss on sale of net assets**\n **$****(3,588****)**\n\n \n\n**19.**\n\n**Sale of Assets Held for Sale: MH 02 & its Subsidiaries**\n\n \n\nDuring the *second* quarter of *2025,* on *May 7, 2025,*the Company sold AEG MH *02* Limited (*“MH02”*) and all its subsidiaries to *two* buyers. Pursuant to which, the Company entered into a Share Purchase Agreement along with its subsidiary, Alternus Europe Limited (the “Seller”), OBN Real Estate Limited (the “Majority Buyer”) and BVP Green Bond *2018* Limited (the “Minority Buyer”) (together the “Buyers”) for the sale of the entire issued share capital of AEG MH *02* Limited (*“MH02”*), including all of *MH02’s* subsidiaries: AED Italia-*01* S.r.l; AED Italia-*02* S.r.l; AED Italia-*03* S.r.l; AED Italia-*04* S.r.l; AED Italia-*05* S.r.l; AED Italia-*06* S.r.l; AED Italia-*07* S.r.l; AED Italia-*08* S.r.l; PC-Italia-*01* S.r.l; PC-Italia-*03* S.r.l; PC-Italia-*04* S.r.l; Risorse Solari I S.r.l; and Risorse Solari III S.r.l (the “Transaction”), for a total consideration of (i) the assumption of approximately $17.6 million in debt (ii) the forbearance by the Majority Buyer on the right to claim up to €15.4 million ($17.4 million) against the Company’s guarantee until *MH02’s* solar projects reach ready to build status, and (iii) the right of the Company to purchase *MH02’s* solar photovoltaic projects at fair market value, subject to a minimum price of €150,000 per megawatt, as each project reaches ready to build status. The Majority Buyer acquired 75.5% of *MH02* and the Minority Buyer acquired the remaining 24.5% of *MH02’s* share capital.\n\n \n\nAs part of the Transaction the Minority Buyer agreed to forbear its claim against AEG, and as an incentive for the parties to enter into the transaction, the Company issued 53,300 shares of restricted common stock to the Minority Buyer. The Company recorded a fair value of $0.4 million for this share issuance as receivable by AEG to the Company.\n\n \n\nAs a result of the Transaction, the Company 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.\n\n \n\nAs this sale is *not* considered an exit strategy of the Italian market, the assets were *not* classified as discontinued operations in accordance with ASC *205*-*20.*\n\n \n\nThe major classes of assets and liabilities transferred on *May 7, 2025*in the sale of *MH02* and its subsidiaries are shown below:\n\n \n\n  \n**As of**\n \n\n  \n**May 7,**\n \n\n**MH 02 and Italian Subsidiaries**\n \n**2025**\n \n\n  \n**(in thousands)**\n \n\n     \n\nAssets:\n    \n\nCash and cash equivalents\n $47 \n\nOther current assets\n  388 \n\nCapitalized development costs\n  3,877 \n\nTotal assets\n $4,312 \n\n     \n\nLiabilities:\n    \n\nAccounts payable & accrued liabilities\n $694 \n\nShort term convertible & non-convertible notes\n  17,606 \n\nOther current liabilities\n  16 \n\nTotal liabilities\n $18,316 \n\nAmounts due to AEG not acquired\n  1,567 \n\nForeign currency translation reserve\n  472 \n\n**Net (gain)/loss on sale of the subsidiaries**\n **$****(11,965****)**\n\n \n\nF-\n*34*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**20.**\n\n**Shareholders**’** Equity**\n\n \n\nCommon Stock\n\n \n\nAs of *December 31, 2024*, the Company had a total of 300 million shares of common stock authorized with 25,189 shares issued and outstanding. As of *December 31, 2025*, the Company had a total of te shares of common stock authorized with 724,658 shares issued and outstanding.\n\n \n\nReverse Stock Split\n\n \n\nOn *October 11, 2024,*the Company effected a *one*-for-25 (*1:25*) reverse stock split of all issued and outstanding shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) effective as of *12:01* a.m. Eastern Time on *October 11, 2024 (*the *“2024* Reverse Stock Split”), vide a Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of Alternus Clean Energy, Inc. (the “Certificate of Amendment”) filed with the Secretary of State of Delaware on *October 3, 2024,*and deemed effective on *October 11, 2024*at *12:01* a.m. Eastern Time.\n\n \n\nAs a result of the *2024* Reverse Stock Split, every *twenty-five* (25) shares of issued and outstanding Common Stock were combined into *one* (*1*) validly issued, fully paid and nonassessable share of Common Stock. The Reverse Stock Split uniformly affected all issued and outstanding shares of Common Stock and did *not* alter any stockholder’s percentage ownership interest in the Company, except to the extent that the *2024* Reverse Stock Split results in the fractional interests. *No* fractional shares will be or shall be issued in connection with the *2024* Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares of Common Stock will receive an amount in cash (without interest or deduction) equal to the fraction of *one* share to which such stockholder would otherwise be entitled multiplied by the share price, representing the product of the average closing price of the Company’s common stock on the Nasdaq Capital Market for the *five* consecutive trading days immediately preceding the effective date of the *2024* Reverse Stock Split and the inverse of the *2024* Reverse Stock Split ratio. Proportional adjustments have also been made to the Company’s outstanding warrants, stock options, and convertible securities, as well as to the reserves available pursuant to the terms of the Company’s *2023* Equity Incentive Plan to reflect the Reverse Stock Split, in each case, in accordance with the terms thereof.\n\n \n\nOn *September 5, 2025,*the Company effected a *one*-for-two hundred (*1:200*) reverse stock split of all issued and outstanding shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) effective as of *12:01* a.m. Eastern Time on *September 5, 2025 (*the “Sept *2025* Reverse Stock Split”), *vide* a Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of Alternus Clean Energy, Inc. (the “Certificate of Amendment”) filed with the Secretary of State of Delaware on *September 2, 2025,*and deemed effective on *September 5, 2025*at *12:01* a.m. Eastern Time.\n\n \n\nAs a result of the Sept *2025* Reverse Stock Split, every *two hundred* (200) shares of issued and outstanding Common Stock combined into *one* (*1*) validly issued, fully paid and nonassessable share of Common Stock. The Sept *2025* Reverse Stock Split uniformly affected all issued and outstanding shares of Common Stock and did *not* alter any stockholder’s percentage ownership interest in the Company, except to the extent that the Sept *2025* Reverse Stock Split results in fractional interests. *No* fractional shares were issued in connection with the Sept *2025* Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of Common Stock received an amount in cash (without interest or deduction) equal to the fraction of *one* share to which such stockholder would otherwise be entitled multiplied by the share price, representing the product of the average closing price of the Company’s common stock on the OTCQB Market for the *five* consecutive trading days immediately preceding the effective date of the Sept *2025* Reverse Stock Split and the inverse of the Sept *2025* Reverse Stock Split ratio. Proportional adjustments have also been made to the Company’s outstanding warrants, stock options, and convertible securities, as well as to the reserves available pursuant to the terms of the Company’s *2023* Equity Incentive Plan to reflect the Sept *2025* Reverse Stock Split, in each case, in accordance with the terms thereof.\n\n \n\nAll share and per share amounts in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted to reflect both the *2024* Reverse Stock Split and the Sept *2025* Reverse Stock Split for all periods presented.\n\n \n\nCommon Share Issuances\n\n \n\nOn *January 2, 2025,*a convertible note holder converted $1,588,693 of the *October*Convertible Note into 11,120 shares of unrestricted common stock valued at $150 per share.\n\n \n\n              On *January 2, 2025,*the Company issued 1,109 shares of common stock to an accredited debt holder valued at $150 per share.\n\n \n\n              On *January 8, 2025,*a convertible promissory note holder converted $202,500 of the *October*Convertible Note into 1,350 shares of unrestricted common stock valued at $150 per share.\n\n \n\n              On *January 10, 2025,*the Company issued 1,162 shares of common stock to an accredited debt holder valued at $128.40 per share.\n\n \n\n             On *January 23, 2025,*the Company issued an aggregate of 7,630 shares of common stock to *six* accredited investors as part of a debt financing, valued at $563,268.\n\n \n\n              On *January 31, 2025,*the Company issued 850 shares of common stock to an accredit debt holder valued at $65.28 per share.\n\n \n\nOn *February 6, 2025,*a convertible note holder converted $85,113 of the *October*Convertible Note into 567 shares of unrestricted common stock valued at $150 per share.\n\n \n\nOn *February 11, 2025,*a convertible note holder converted $150,000 of the *October*Convertible Note into 1,000 shares of unrestricted common stock valued at $150 per share\n\n \n\nOn *April 14, 2025*the Company issued a total of 484,100 shares of restricted common stock valued at $3,872,800, including 55,000 shares to Alternus Energy Group PLC, a related party, 15,000 shares to each of our *4* current independent directors (Ms. Bjornov, Mr. Wikborg, Mr. Parker and Mr. Ratner) and *one* past director, Mr. Chaudhri, 75,000 shares each to Mr. Browne, our CEO, and Mr. Thomas, our executive director, 25,000 shares to Ms. Durant, our CLO, 12,500 shares to an employee for past services rendered, 28,750 shares to Hover Energy LLC for certain assets acquired and 137,850 shares to *four* accredited *third* party debt holders.\n\n \n\nOn *May 1, 2025*the Company issued 5,000 shares of restricted common stock to Assure Power, LLC for services pursuant to a consulting agreement, valued at $43,000.\n\n \n\nOn *May 2, 2025,*the Company issued 20,000 shares of common stock to SPC as a settlement fee, valued at $172,000.\n\n \n\nOn *May 20, 2025*the Company issued 40,000 shares of restricted common stock to a related party, Alternus Energy Group PLC, for services rendered, valued at $224,000.\n\n \n\nF-\n*35*\n\n[Table of Contents](#toc)\n\n \n\nOn *June 30, 2025*a convertible promissory note holder converted $67,063 worth of the *October*Convertible Note into 29,500 shares of unrestricted common stock valued at $6.40 per share.\n\n \n\nOn *July 15, 2025*a convertible promissory note holder converted $39,710 worth of the *October*Convertible Note into 30,000 shares of unrestricted common stock valued at $1.32 per share.\n\n \n\nOn *August 4, 2025*a convertible promissory note holder converted $22,072 worth of the assigned portion of the *October*Convertible Note into 32,190 shares of unrestricted common stock valued at $0.69 per share.\n\n \n\nOn *November 6, 2025,*a portion equal to $13,250 of the assigned Convertible Note (originally issued in *October 2024,*of which, $142,857 was assigned to a *third* party on *August 1, 2025),*was converted at a discounted conversion price of $0.385 into 34,416 shares of unrestricted common stock, and valued at $0.70 per share.\n\n \n\nPreferred Stock\n\n \n\nAs of *December 31, 2025*and *2024*, the Company also had a total of 1,000,000 shares of preferred stock authorized. There were no preferred shares issued or outstanding as of *December 31, 2024.*\n\n \n\nAs of *December 31, 2025,*there were 60,000 shares of Series A Super Voting Preferred Stock (the “Series A”), 21,150 shares of Series B Convertible Preferred Stock (the \"Series B\") and 3,150 shares of Series C Convertible Preferred Stock (the \"Series C\") issued and outstanding.\n\n \n\nThe board of directors of the Company has the authority to establish *one* or more series of preferred stock, fix the voting rights, designations, powers, preferences and any other rights, if any, of each such series and any qualifications, limitations and restrictions thereof.\n\n \n\n*Series A Super Voting Preferred Stock*\n\n \n\nEach share of the Series A is entitled to have the right to vote in an amount equal to 10,000 votes per share, voting with the common stock on all matters as a single class. Each share of Series A has a par value of $0.0001 per share. The Series A is *not* convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series A has *no* stated maturity and is *not* subject to any sinking fund. The holders of Series A shall *not* be entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company.  The terms of the Series A are set forth in the Certificate of Designation of Series A, filed as part of the Company’s current report on Form *8K* filed on *February 20, 2025.*\n\n \n\n*Series A Issuances*\n\n \n\nOn *February 18, 2025*the Company issued 1 share of Series A and on *March 21, 2025*the Company issued an additional 9,999 shares of Series A Super Voting Preferred Stock to the Company’s CEO, Mr. Vincent Browne, which gave Mr. Browne controlling voting rights over all Company matters requiring a shareholder vote. The Company recorded employee stock compensation expense of $60,000 representing the fair value of the shares issued to account for the control premium resulting from the issuance.\n\n \n\nOn *April 24, 2025*the Company issued an additional 50,000 shares of Series A Super Voting Preferred Stock to Mr. Browne. Because the Series A Super Voting Preferred Stock i) ranks junior to all other classes or series of capital stock, including Common Stock, with respect to any asset or property distributions upon liquidation or winding up of the Company, and ii) is *not* entitled to participate with holders of Common Stock in any dividends paid by the Company, management previously concluded that there was *no* economic value inherent in Series A Preferred Stock (i.e., the value in the 10,000 shares issued in *Q1* was solely related to the control premium or a hypothetical option on control of the Company). In connection with the *April*issuance, there was *no* control premium implicit in the additional 50,000 shares because Mr. Browne maintained voting control both before and after the issuance. As a result, no compensation expense was recorded in connection with the *April*issuance.\n\n \n\n*Series B Convertible Preferred Stock*\n\n \n\nEach share of Series B has a par value of $0.0001 per share and a **face** value of $1,000 per share. The Series B has *no* stated maturity, is *not* entitled to receive dividends, and is *not* subject to any sinking fund. The Series B is entitled to receive distributions in the event of any liquidation, dissolution or winding up of the Company pari passu with the Common Stock.  The terms of the Series B are set forth in detail below and in the Certificate of Designation of Series B, filed as part of the Company’s current report on Form *8K* filed on *October 6, 2025.*\n\n \n\nConversion Right.  Each share of Series B converts into a number of fully paid and non-assessable shares of Common Stock equal to the **face** value of each share ($1,000) divided by the Conversion Price in effect at the time of conversion, at the option of the Holder, at or after the earlier of (i) *six* months after the Company’s uplisting to a national exchange (the “Uplist”), or (ii) if *no* Uplist has occurred within the *first* *nine* months, then *nine* months from the Original Issue Date. The Conversion Price is $1.00 per share, subject to adjustment in accordance with the Certificate of Designation. The Series B ranks senior to the Company’s Series A Super Voting Preferred Stock and pari passu with the Company’s common stock with respect to rights upon liquidation.\n\n \n\nF-\n*36*\n\n[Table of Contents](#toc)\n\n \n\nAdjustments of Conversion Price. If, from the Original Issue Date to *December 31, 2026,*the Company has issued any shares of Common Stock or convertible preferred stock (or any securities convertible into or exercisable for Common Stock) at a price per share less than the then-effective Conversion Price (the “Original Conversion Price”) of the Series B (a “Dilutive Issuance”), then the Original Conversion Price shall be reduced to the lowest price per share of Common Stock or convertible preferred stock issued during this period. As of *December 31, 2025,*the Original Conversion Price has been adjusted to $0.10 per share, due to the issuance of shares of Series C Convertible Preferred Stock.\n\n \n\nRestriction on Conversion. In *no* event shall the Holder have the right or the Company be required to convert, as applicable, shares of Series B if as a result of such conversion the aggregate number of shares of Common Stock beneficially owned by such Holder and its Affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the shareholder for purposes of Section *13*(d) of the *1934* Act, would exceed 19.99% of the outstanding shares of the Common Stock following such conversion.\n\n \n\nRestriction on Sales. Beginning on the month after the Holder is able to convert the Series B and utilize an exemption under SEC Rule *144,* the Holder *may*sell a maximum amount of Common Shares per month *not* to exceed the average daily volume of the Company’s common stock in the prior month.\n\n \n\nVoting Rights. Each holder of Series B has full voting rights and powers equal to the voting rights and powers of holders of common stock, and for so long as Series B is issued and outstanding, the holders of Series B shall vote together as a single class with the holders of the Company’s common stock and the holders of any other class or series of shares entitled to vote on all such matters equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. (For avoidance of doubt, voting rights are on an ‘as-converted’ basis.)\n\n \n\n*Series B Issuances*\n\n \n\n                 On *September 30, 2025,*the Company issued an aggregate of 21,150 shares of Series B Convertible Preferred Stock to Hover Energy LLC as part of the EverOn Energy Joint Venture (See Footnote *6*).\n\n \n\n*Series C Convertible Preferred Stock *\n\n \n\n               Each share of Series C shall convert into a number of fully paid and non-assessable shares of Common Stock equal to the value of each share ($1,000) divided by the Conversion Price in effect at the time of conversion, at the option of the Holder, at or after *one* year from the issuance date. The Conversion Price is $0.10 per share, subject to adjustment in accordance with the Certificate of Designation.  \n\nThe terms of the Series C are set forth in detail below and in the Certificate of Designation of Series C, filed as part of the Company’s current report on Form\n*8K* filed on\n*March 9, 2026.*\n\n \n\n*               *Adjustments of Conversion Price. If, from the Original Issue Date to\n*December 31, 2028,*the Company has issued any shares of Common Stock or convertible preferred stock (or any securities convertible into or exercisable for Common Stock) at a price per share less than the then-effective Conversion Price (the \"Original Conversion Price\") of the Series C (a \"Dilutive Issuance\"), then the Original Conversion Price shall be reduced to the lowest price per share of Common Stock or convertible preferred stock issued during this period.  As of\n*December 31, 2025*there have\n*not* been any adjustments to the Original Conversion Price.\n\n \n\n*             *Restriction on Conversion. In\n*no* event shall the Holder have the right or the Company be required to convert, as applicable, shares of Series C if as a result of such conversion the aggregate number of shares of Common Stock beneficially owned by such Holder and its Affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the shareholder for purposes of Section\n*13*(d) of the\n*1934* Act, would exceed\n19.99% of the outstanding shares of the Common Stock following such conversion.\n\n \n\n*               *Restriction on Sales. Beginning on the month after the Holder is able to convert the Series C and utilize an exemption under SEC Rule\n*144,* the Holder\n*may*sell a maximum amount of Common Shares per month\n*not* to exceed the average daily volume of the Company’s common stock in the prior month.\n\n \n\n*             *Voting Rights. Each holder of Series C has full voting rights and powers equal to the voting rights and powers of holders of common stock, and for so long as Series C is issued and outstanding, the holders of Series C shall vote together as a single class with the holders of the Company’s common stock and the holders of any other class or series of shares entitled to vote on all such matters equal to the number of whole shares of Common Stock into which the shares of Series C Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. (For avoidance of doubt, voting rights are on an ‘as-converted’ basis.)\n\n \n\n*           *Dividend Rights. The holders of Series C, as such, will\n*not* be entitled to receive dividends of any kind.\n\n \n\n*           *Liquidation Preference. The holders of Series C shall be entitled to receive distributions in the event of any liquidation, dissolution or winding up of the Company pari passu with the Common Stock.\n\n \n\n*Series C Issuances*\n\n \n\n            On *December 31, 2025,*the Company issued an aggregate of 3,150 shares of Series C to *two* accredited debt holders in exchange for the cancellation of $3.95 million worth of debt.\n\n \n\nWarrants\n\n \n\nAs of *December 31, 2024*, warrants to purchase up to 2,936,233 shares of common stock were issued and outstanding. These warrants were related to financing activities. During the *twelve* months ended *December 31, 2024,*the Company issued 2,933,765 additional warrants.  During the *twelve* months ended *December 31, 2025,*the Company issued 1,199,677 additional warrants, related to financing activities.\n\n \n\nF-\n*37*\n\n[Table of Contents](#toc)\n\n \n\nAs of *December 31, 2025*, warrants to purchase up to 4,135,910 shares of common stock were issued and outstanding.\n\n \n\n   * *** **  * *** ** \n**Weighted**\n \n\n   * *** ** \n**Weighted**\n  \n**Average**\n \n\n   * *** ** \n**Average**\n  \n**Remaining**\n \n\n   * *** ** \n**Exercise**\n  \n**Contractual**\n \n\n  \n**Warrants**\n  \n**Price**\n  \n**Term (Years)**\n \n\n             \n\nOutstanding - January 1, 2024\n  2,469  $56,103.87  $*-* \n\nIssued during the year\n  2,933,765   0.95   4.08 \n\nExpired during the year\n  *-*   *-*   *-* \n\nOutstanding - December 31, 2024\n  2,936,234  $48.12  $4.08 \n\nIssued during the year\n  1,199,677   0.88   1.97 \n\nExpired during the year\n  *-*   *-*   *-* \n\nOutstanding – December 31, 2025\n  4,135,911   34.42   6.05 \n\nExercisable – December 31, 2025\n  4,135,911   34.42   6.05 \n\n \n\n*2023* Equity Incentive Plan\n\n \n\nAs of *December 31, 2024 *and *2025,* there were 11,200 shares of common stock available to be granted under the *2023* Equity Incentive Plan. As of *December 31, 2024 *and *2025* no shares were issued or outstanding under the *2023* Equity Incentive Plan.\n\n \n\nOn *March 21, 2025,*Mr. Vincent Browne, our CEO and Interim CFO and shareholder with majority voting rights, representing 91% of the shares entitled to vote, approved an amendment to the *2023* Equity Incentive Plan (the “Plan Amendment”) as adopted by the Board upon the recommendation of the Compensation Committee. The Plan Amendment relates to an increase in the number of shares of Common Stock that shall be available for the grant of awards under the Plan from 11,200 shares of Common Stock, so that the maximum aggregate number of shares of Common Stock that *may*be issued under the Plan is increased each fiscal year (the “Adjustment Date”) by an amount equal to the lesser of (i) that number of shares equal to 15% of the outstanding shares of Common Stock on the applicable Adjustment Date, less (a) the number of shares of Common Stock that *may*be issued under the Plan prior to the Adjustment Date, and (b) the number of shares of Common Stock that *may*be issued under any other stock option plan of the Company in effect as of the Adjustment Date; or (ii) such lesser number of shares of Common Stock as *may*be determined by the Board.\n\n \n\n \n\n**21.**\n\n**Segment and Geographic Information**\n\n \n\nEffective *January 1, 2024,*the Company adopted Accounting Standards Update (ASU) *2023*-*07,* Segment Reporting (Topic *280*): Improvements to Reportable Segment Disclosures. This update requires disclosure of significant segment expenses regularly provided to the Chief Operating Decision Maker (CODM) and enhances qualitative disclosures about segment operations. The adoption of this ASU did *not* impact the Company’s consolidated financial position, results of operations, or cash flows.\n\n \n\nThe Company has two reportable segments that consist of PV operations by geographical region, United States Operations and European Operations. European operations represent our most significant business. The Chief Operating Decision-Maker (CODM) is the CEO.\n\n \n\nHistorically, the European Segment derives revenues from *three* sources, Country Renewable Programs, Green Certificates and Long-term Offtake Agreements. The United States Segment revenues are derived from Long-term Offtake Agreements. As of *December 31, 2024, *the Company had no revenue from discontinued operations as the operating parks in Poland, the Netherlands, and Romania \n\nwere sold. Additionally, the Company had\n*no* revenue continuing operations as the Lightwave operating parks were sold back to the parent company, AEG, as a result of the deconsolidation of Alternus Energy Americas Inc. on\n*November 5, 2024.*\n\n \n\n           In evaluating financial performance, the CODM uses Adjusted EBITDA to assess segment performance and decide how to allocate resources. Adjusted EBITDA is defined as earnings before interest expense, income tax expense, depreciation and amortization, and any *one* time non-operational costs or costs related to financing or capital transactions. The Company uses Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations. Adjusted EBITDA is *not* a measure of the Company’s financial performance under GAAP and should *not* be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. As a trans-Atlantic independent solar power provider, we evaluate many of our capital expenditure decisions at a regional level. Accordingly, expenditures on property, plant and equipment and associated debt by segment are presented.\n\n \n\nThe following tables present information related to the Company’s reportable segments. The data has been presented to show the effect of discontinued operations from Poland, the Netherlands, and Romania for all periods.\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Revenue by Segment**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nEurope – Discontinued Operations\n  -   9,809 \n\nUnited States\n  -   311 \n\n**Total for the period**\n $**-**  $**10,120** \n\n \n\nF-\n*38*\n\n[Table of Contents](#toc)\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Net Income/(Loss) by Segment**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nEurope\n $13,704  $(10,584)\n\nEurope – Discontinued Operations\n  -   45,912 \n\nUnited States\n  (21,010)  (14,250)\n\n**Total for the period**\n $**(7,306**) $**21,078**** **\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Assets by Segment**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n**Europe – Continuing Operations**\n   ** **   ** **\n\nOther Assets\n  12   3,958 \n\n**Total for Europe – Continuing Operations**\n $**12**  $**3,958** \n\n         \n\n**United States – Continuing Operations**\n   ** **   ** **\n\nIntangible assets\n $37,518  $- \n\n**Goodwill**\n $**18,964**  $**-** \n\nOther Assets\n  550   3,769 \n\n**Total for United States – Continuing Operations**\n $**57,032**  $**3,769** \n\n \n\n  \n**Year Ended December 31,**\n \n\n**Liabilities by Segment**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n**Europe – Continuing Operations**\n   ** **   ** **\n\nDebt\n $1,176  $19,807 \n\nOther Liabilities\n  1,075   1,200 \n\n**Total for Europe – Continuing Operations**\n $**2,252**  $**21,007** \n\n         \n\n**United States – Continuing Operations**\n   ** **   ** **\n\nDebt\n $14,885  $9,598 \n\nOther Liabilities\n  16,885   11,007 \n\n**Total for United States – Continuing Operations**\n $**31,771**  $**20,605** \n\n \n\nF-\n*39*\n\n[Table of Contents](#toc)\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Revenue by Product Type**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n**Country Renewable Programs (FiT)**\n   ** **   ** **\n\nUnited States - Continuing operations\n $-  $311 \n\n**Total for the period**\n $**-**  $**311** \n\n         \n\n**Country Renewable Programs (FiT)**\n   ** **   ** **\n\nEurope – Discontinued Operations\n  -   334 \n\n**Total for the period**\n $**-**  $**334** \n\n         \n\n**Green Certificates (FiT)**\n   ** **   ** **\n\nEurope – Discontinued Operations\n $-  $5,803 \n\nTotal for the period\n $-  $5,803 \n\n         \n\n**Energy Offtake Agreements (PPA)**\n   ** **   ** **\n\n**Europe – Discontinued Operations**\n  **-**   **3,638** \n\nTotal for the period\n $-  $3,638 \n\n         \n\n**Other Revenue**\n   ** **   ** **\n\nEurope – Discontinued Operations\n  -   34 \n\nTotal for the period\n $-  $34 \n\n \n\n  \n**Year Ended December 31,**\n \n\n**Adjusted EBITDA by Segment**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nEurope\n $(1,225) $(3,347)\n\nEurope – Discontinued Operations\n  -   5,485 \n\nUnited States\n  (6,840)  (8,454)\n\n**Total for the period**\n $**(8,065****)** $**(6,316**)\n\n \n\nF-\n*40*\n\n[Table of Contents](#toc)\n\n \n\nBelow is a reconciliation of net income to adjusted EBITDA for the periods presented:\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Adjusted EBITDA Reconciliation to Net Income/(Loss)**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\n**Europe**\n   ** **   ** **\n\nAdjusted EBITDA\n $(1,225) $(3,347)\n\nDepreciation, amortization, and accretion\n  -   (21)\n\nInterest expense\n  (584)  (3,953)\n\nImpairment of assets\n  -   (3,263)\n\nGain on sale of assets\n  15,513   (3,263)\n\n**Net Income (Loss)**\n $**13,704**** ** $**(10,584****)**\n\n         \n\n**Europe – Discontinued Operations**\n   ** **   ** **\n\nAdjusted EBITDA\n $-  $5,485 \n\nDepreciation, amortization, and accretion\n  -   (1,691)\n\nInterest expense\n  -   (9,726)\n\nIncome taxes\n  -   (87)\n\nSolis bond waiver fee\n  -   - \n\nImpairment loss recognized on the remeasurement to fair value less costs to sell\n  -   - \n\nGain on sale of discontinued operations, net assets\n  -   51,931 \n\n**Net Income (Loss)**\n $**-**  $**45,912**** **\n\n         \n\n**United States**\n   ** **   ** **\n\nAdjusted EBITDA\n $(6,840) $(8,454)\n\nDepreciation, amortization, and accretion\n  (593)  (194)\n\nInterest expense\n  (3,614)  (4,820)\n\nFair value movement of FPA asset\n  -   (483)\n\nFair value movement of convertible note\n  (3,967)  67 \n\nDebt restructuring costs\n  (753)  - \n\nCosts associated with legal actions related to unpaid liabilities\n  (1,232)  - \n\nFair value movement of warrant\n  1,564   565 \n\nLoss on issuance of debt\n  (35)  - \n\nLoss on extinguishment of debt\n  (3,187)  - \n\nGain on settlement of liabilities\n  596   - \n\nLoss on settlement of SAA with Hover\n  (2,025)  - \n\nProvision for loss from related party\n  (561)  (520)\n\nOther expense\n  (363)  179 \n\nIncome taxes\n  -   (590)\n\n**Net Income (Loss)**\n $**(21,010****)** $**(14,250****)**\n\n**Consolidated Net Income (Loss)**\n $**(7,306**) $**21,078**** **\n\n \n\nTheres was no revenue in the year ended *December 3, 2025.*\n\n \n\nOne customer represented 100% of continuing operational revenues during the year ended *December 31, 2024.*The revenues from this customer accounted for $0.3 million of revenue for the year ended *December 31, 2024.  *Five customers represented 76% of the discontinued operational revenues during the year ended *December 31, 2024.*The revenues from these customers accounted for $7.7 million of revenue for the year ended *December 31, 2024.*\n\n \n\n \n\n**22.**\n\n**Income Tax Provision**\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Major Components of Tax Expense/(Income)**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nCurrent tax expense - continuing operations\n $-  $590 \n\nCurrent tax expense - discontinued operations     87 \n\n**Actual income tax expense (benefit) **\n $**-**  $**677** \n\n \n\n \n\nAn explanation of the relationship between tax expense and accounting profit for continuing operations before the adoption of ASU *2023*-*09* for the tax year ended *December 31, 2024*is as follows:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nAccounting profit before tax\n $-  $21,756 \n\nTax at the applicable rate of 21%\n  -   4,569 \n\nState income taxes, net of federal benefit\n  -   (710)\n\nPermanent items\n  -   380 \n\nTax effect of differences in foreign tax rates\n  -   (4,747)\n\nOther\n  -   1,311 \n\nChange in valuation allowance\n  -   (213)\n\n**Actual income tax expense/(benefit) - continuing operations**\n $**-**  $**590** \n\nDiscontinued operations $  $**87** \n\n \n\nF-\n*41*\n\n[Table of Contents](#toc)\n\n \n\nAs of *December 31, 2025,*the Company has adopted ASU *2023*-*09* prospectively. An explanation of the relationship between tax expense and accounting profit after the adoption of ASU *2023*-*09* for the tax year ended *December 31, 2025*is as follows:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025 **\n \n\n  \n**(in thousands)**\n \n\n**US Federal Statutory Rate**\n $(1,362)21.0%\n\n**State income taxes, net of federal benefit**\n  - 0.0%\n\n       \n\n**Foreign tax effects**\n   ** ** ** **\n\n**Ireland**\n   ** ** ** **\n\nDebt Cancellation Income related to loan not historically deducted\n  (1,932)29.8%\n\nDifferences in statutory tax rates between US and Ireland\n  (1,168)18.0%\n\nTrue up of DTA due to disposal of subsidiaries\n  456 -7.0%\n\nChange of Valuation Allowance-Ireland\n  (244)3.8%\n\nNon taxable items due to disposal of entity\n  59 -0.9%\n\n**All Other foreign countries**\n  (48)0.7%\n\n       \n\n**Non taxable or Non Deductible items**\n   ** ** ** **\n\nStock issuance costs\n  58 -0.9%\n\nOther equity expenses\n  878 -13.5%\n\nFV change and interest of convertible notes\n  1,598 -24.6%\n\nWarrant\n  (72)1.1%\n\n**Uncertain Tax Positions**\n  - 0.0%\n\n**Change in Valuation Allowance-FED**\n  1,777 -27.4%\n\n**Actual income tax expense (benefit)**\n $(0)- \n\n \n\n \n\nThe tax effects of temporary difference and carryforwards that give rise to significant portions of the net deferred tax assets were as follows:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nDeferred tax assets:\n        \n\nNet operating losses\n $5,645  $4,137 \n\nStock basedd compensation\n  588   - \n\nAsset basis differences\n  -   869 \n\nInterest expense carryforward\n  14   475 \n\nTotal deferred tax assets\n  6,247   5,481 \n\nDeferred tax asset valuation allowance\n  (6,133)  (5,481)\n\nNet deferred tax assets\n  114   - \n\n         \n\nDeferred tax liabilities:\n        \n\nInvestment in EverOn\n  (114)  - \n\nTotal deferred tax liabilities\n  (114)  - \n\n**Net deferred taxes**\n $**-**  $**-** \n\n \n\nThe Company’s valuation allowance increased during *2025* by $562, primarily due to the intangible assets capitalized for book purposes related to the Company's investment in EverOn. Deferred tax assets have *not* been recognized in respect of these future deductible amounts as they *may**not* be used to offset taxable profits elsewhere in the Company and there are *no* other tax planning opportunities or other evidence of recoverability in the near future.\n\n \n\nDeferred tax assets have *not* been recognized in respect of these losses as they *may**not* be used to offset taxable profits elsewhere in the Company and there are *no* other tax planning opportunities or other evidence of recoverability in the near future.\n\n \n\nFuture realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of *December 31, 2025*, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was *not* possible to reasonably quantify future taxable income and determined that it is more likely than *not* that all of it deferred tax assets will *not* be realized. Accordingly, the Company maintained a full valuation allowance as of *December 31, 2025*.\n\n \n\nAs of *December 31, 2025*, the Company had approximately (tax effected) $4.4 million of federal, $1.0 million of state, and $0.2 million of foreign net operating losses to offset future taxable income. If *not* utilized, the state net operating loss will expire in *2044.* The Luxembourg net operating loss of $17 thousand will start to expire in *2040.* The remaining foreign net operating loss carryovers have unlimited carryforward periods. The Company is in the process of analyzing whether any changes to its capital structure resulted in an ownership change, and whether US net operating losses would be restricted in use as a result thereof. \n\n \n\nThe ability of the Company to utilize its existing federal and state carryforwards *may*have been limited by Section *382* of the Internal Revenue Code of *1986,* as amended (the \"Code\"), which imposes an annual limit on the ability of a corporation that undergoes an \"ownership change\" to use its tax attribute carryforwards to reduce its liability. An ownership change is generally defined as a greater than *50%* increase in equity ownership by *5%* shareholders in any *three*-year period. \n\n \n\nF-\n*42*\n\n[Table of Contents](#toc)\n\n \n\nThe Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of *December 31, 2025*and *2024*, the total balance of accrued interest and penalties related to uncertain tax positions was $630 and $590, respectively. The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits:\n\n \n\n  \n**Year Ended December 31,**\n \n\n  \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nUnrecognized tax benefits at beginning of year\n  590   - \n\nGross increases – tax positions in prior periods\n $-  $360 \n\nGross increases – tax positions in current period\n  -   230 \n\n**Unrecognized tax benefits at end of year**\n $**590**  $**590** \n\n \n\nUnrecognized tax benefits are *not* expected to significantly increase or decrease within the next *12* months.\n\n \n\n \n\n**23.**\n\n**Related Party**\n\n \n\nThe following is a summary of transactions since *January 1, 2024 *to which we have been a party, in which the amount involved exceeded $120,000 and in which any of our directors, executive officers or holders of more than *5%* of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest other than compensation and other arrangements that are described the sections titled “Executive Compensation” and “Non-Employee Director Compensation.” We also describe below certain other transactions with our directors, former directors, executive officers and stockholders.\n\n \n\nAEG:\n\n \n\nAlternus Energy Group Plc (“AEG”) was an 48% shareholder of the Company as of *December 31, 2024*. As of *December 31, 2025*, AEG was a 14.69% shareholder of the Company.\n\n \n\nIn *January 2024,*the Company assumed a $938 thousand (€850 thousand) convertible promissory note from AEG. The note had a 10% interest maturing in *March 2025.*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 the Company’s restricted common stock.\n\n \n\nDuring the period ended *December 31, 2025,*the Company and its subsidiaries, and AEG and its subsidiaries had numerous financial transactions between each other which were approved by the unconflicted members of each company’s board of directors.  Two of our Company's board members, Mr. Vincent Browne and Mr. John Thomas, are also board members of AEG.\n\n \n\n               Specifically during the period, the Company issued 201,600 shares to AEG and its affiliates having a fair value of $1.4 million as of *December 31, 2025.*\n\n \n\nNordic ESG\n\n \n\nIn *January*of *2024,* the Company issued 310,600 shares of restricted common stock valued at $30.75 per share to Nordic ESG and Impact Fund SCSp (“Nordic ESG”) as settlement of AEG’s €8 million ($9.7 million) note. This resulted in Nordic ESG becoming a 10% shareholder. As of *December 31, 2024,*Nordic ESG was a 6.5% shareholder.  As of *December 31, 2025* Nordic ESG was a less than 1% shareholder.\n\n \n\nSponsor:\n\n \n\nOn *March 19, 2024*we entered into a settlement agreement with the Sponsor and SPAC Sponsor Capital Access (“SCA”) pursuant to which, among other things, we agreed to repay Sponsor’s debt to SCA, related to the Sponsor’s SPAC entity extensions, in the amount of $1.4 million and issue 45 shares of restricted common stock valued at $2,350 per share to SCA.\n\n \n\nClean Earth Acquisitions Sponsor LLC (“Sponsor”) was a less than 5% shareholder of the Company as of *December 31, 2024*and a less than 1% shareholder as of *December 31, 2025.*\n\n \n\nHover:\n\n \n\nOn *September 30, 2025*we entered into a joint venture operating agreement with Hover Energy LLC (“Hover”) pursuant to which Alternus sold a 49% interest in its subsidiary, EverOn Energy LLC (the “JV”) to Hover, and issued 20,000 shares of the Company’s Series B Convertible Preferred Stock (the “Series B”) to Hover, in exchange for which Hover contributed certain Microgrid Projects to the JV, including related supply and management services agreements to be entered into with the JV. The Company issued an additional 1,150 shares of Series B to Hover as part of a settlement agreement.  Also, The JV and Hover have entered into an equipment supply agreement, whereby Hover provides the JV with favorable, below market purchase and licensing terms. See Footnote *6* for more details.  As of *December 31, 2025,*Hover was a 4.1% common shareholder and held 21,150 shares of Series B Convertible Preferred Stock, which cannot convert or vote until the date our common stock is relisted on Nasdaq or *June 30, 2026,*whichever occurs sooner.\n\n \n\nD&O:\n\n \n\nIn connection with the Business Combination Closing, the Company entered into indemnification agreements (each, an “Indemnification Agreement”) with its directors and executive officers. Each Indemnification Agreement provides for indemnification and advancements by the Company of certain expenses and costs if the basis of the indemnitee’s involvement in a matter was by reason of the fact that the indemnitee is or was a director, officer, employee, or agent of the Company or any of its subsidiaries or was serving at the Company’s request in an official capacity for another entity, in each case to the fullest extent permitted by the laws of the State of Delaware.\n\n \n\nOn *April 25, 2024,*Joseph E. Duey, the Company’s Chief Financial Officer, resigned, effective as of *April 30, 2024.*Mr. Duey advised the Company that his decision to step down from the role of Chief Financial Officer was *not* based on any disagreement with the Company on any matter relating to its operations, policies, or practices. Mr. Duey is pursuing outside interests *not* in the renewable energy industry. Vincent Browne, the Company’s Chief Executive Officer, is acting as interim Chief Financial Officer. The Company will be seeking a suitable replacement in due course.\n\n \n\nF-\n*43*\n\n[Table of Contents](#toc)\n\n \n\nOn *May 15, 2024,*Mohammed Javade Chaudhri, a Class I director of the Company, resigned from the Company’s Board of Directors (the “Board”) effective immediately. Mr. Chaudhri’s decision to resign from the Board is solely for personal reasons and is *not* the result of any disagreement with the Company’s operations, policies, or procedures, or any disagreements in respect of accounting principles, financial statement disclosure, or any issue impacting on the committees of the Board on which he served.\n\n \n\nOn *January 28, 2025,*John McQuillan, a Class I director of the Company, resigned from the Company’s Board of Directors (the “Board”) effective immediately.\n\n \n\nOn *January 28, 2025,*Rolf Wikborg was elected to the Board effective immediately. The Board assessed the independence of Mr. Wikborg under the Company’s Corporate Governance Guidelines and the independence standards under Nasdaq rules and has determined that Mr. Wikborg is independent. Along with their appointment, Mr. Wikborg was appointed to serve on the Audit Committee, as well as the Chair of the Compensation Committee, and as a member of the Nominating and Corporate Governance Committee of the Company, effective immediately. \n\n \n\nOn *March 21, 2025*the Company filed an Amended and Restated Certificate of Designation of its Series A Super Voting Preferred Stock, such that 10,000 shares are designated as Series A and all were issued to Mr. Vincent Browne. Each share of the Series A is entitled to have the right to vote in an amount equal to 10,000 votes per share, voting with the common stock on all matters as a single class.\n\n \n\nAlso on *March 21, 2025,*Mr. Vincent Browne, our CEO and Interim CFO and shareholder with majority voting rights, representing 91% of the shares entitled to vote, approved (i) an amendment to our Certificate of Incorporation to effect a reverse stock split of our common stock at a ratio ranging from *1*-for-2 and *1*-for-500, as determined by our Board of Directors in its sole discretion, and (ii) an amendment to the Alternus Clean Energy, Inc. *2023* Equity Incentive Plan (the “Plan Amendment”) as adopted by the Board upon the recommendation of the Compensation Committee. The Plan Amendment relates to an increase in the number of shares of Common Stock that shall be available for the grant of awards under the Plan from 11,200 shares of Common Stock, so that the maximum aggregate number of shares of Common Stock that *may*be issued under the Plan is increased each fiscal year (the “Adjustment Date”) by an amount equal to the lesser of (i) that number of shares equal to 15% of the outstanding shares of Common Stock on the applicable Adjustment Date, less (a) the number of shares of Common Stock that *may*be issued under the Plan prior to the Adjustment Date, and (b) the number of shares of Common Stock that *may*be issued under any other stock option plan of the Company in effect as of the Adjustment Date; or (ii) such lesser number of shares of Common Stock as *may*be determined by the Board.\n\n \n\nOn *April 14, 2025*the Company issued a total of 305,000 shares of restricted common stock valued at $2,440,000, including 55,000 shares to Alternus Energy Group PLC, a related party, 15,000 shares to each of our *4* current independent directors (Ms. Bjornov, Mr. Wikborg, Mr. Parker and Mr. Ratner) and *one* past director, Mr. Chaudhri, 75,000 shares each to Mr. Browne, our CEO, and Mr. Thomas, our executive director, and 25,000 shares to Ms. Durant, our CLO.\n\n \n\nOn *April 24, 2025*the Company’s Board increased the total shares designated as Series A by 50,000 and issued those additional 50,000 shares of Series A Super Voting Preferred Stock to Mr. Browne.\n\n \n\nOn *April 25, 2025,*Mr. Vincent Browne, our CEO, Interim CFO and shareholder with majority voting rights, representing 87% of the shares entitled to vote, approved an amendment to our Certificate of Incorporation to increase the total number of authorized shares of common stock from 300,000,000 to 600,000,000.\n\n \n\nOn *December 30, 2025,*Mr. Vincent Browne, our CEO, Interim CFO and shareholder with majority voting rights, representing 99.9% of the shares entitled to vote, approved an amendment to our Certificate of Incorporation to increase the total number of authorized common stock from 600,000,000 to 2,000,000,000. \n\n \n\nOn *March 3, 2026,*we entered into subscription agreements with certain accredited investors, of which Nicholas Parker, *one* of our directors, was one, pursuant to which Mr. Parker invested $50,000 and in consideration was issued a $62,500 promissory note on identical terms as the other investors and was issued a pro rata portion, equal to 125 shares, of Series C Convertible Preferred Stock.\n\n \n\nConsulting Agreements\n\n \n\nOn *May 15, 2021*VestCo Corp., a company owned and controlled by our Chairman and CEO, Vincent Browne, entered into a Professional Consulting Agreement with *one* of our US subsidiaries under which it pays VestCo a monthly fee of $16,000. This agreement has a five-year initial term and automatically extends for additional *one*-year terms unless otherwise unilaterally terminated. Effective *January 1, 2025,*the Compensation Committee and the Board of Directors ratified an amendment to this consulting services agreement, such that it was assigned to the Company and VestCo’s fees increased by $10,000 per month.\n\n \n\nIn *July*of *2023,* John Thomas, *one* of our directors, entered into a Consulting Services Agreement with *one* of our US subsidiaries under which it pays Mr. Thomas a monthly fee of $11,000. This agreement has a five-year initial term and automatically extends for additional *one*-year terms unless otherwise unilaterally terminated. Effective *January 1, 2025,*the Compensation Committee and the Board of Directors ratified an amendment to this consulting services agreement, such that it was assigned to the Company and the fees increased by $8,090 per month.\n\n \n\n  \n**Year Ended December 31,**\n \n\n**Director’s remuneration**\n \n**2025**\n  \n**2024**\n \n\n  \n**(in thousands)**\n \n\nRemuneration in respect of services as directors (including Mr. Browne)\n $547  $292 \n\nRemuneration in respect to long term incentive schemes (stock compensation)\n  1,680   - \n\n**Total**\n $**2,227**  $**292** \n\n \n\n**24.**\n\n**Subsequent Events**\n\n \n\nManagement has evaluated subsequent events that have occurred through the date the financial statements were issued and has determined that there were *no* subsequent events that required recognition or disclosure in the financial statements as of and for the year ended *December 31, 2025*, except as disclosed below.\n\n \n\nF-\n*44*\n\n[Table of Contents](#toc)\n\n \n\nPromissory Note Extensions and Settlement of Debt:\n\n \n\nThe $1,250,000 promissory note issued in *December*of *2024,* the $312,500 note issued in *May*of *2025,* the $312,500 note issued in *September*of *2025* and the $250,000 note issued in *November*of *2025* to SNC were each extended on a monthly basis and the original issue discount (OID) increased by *5%* each month.  On *March 31, 2026*the Company settled with SNC pursuant to which the Company issued 7,583 shares of Series D Convertible Preferred Stock as total repayment for, and the replacement and cancellation of, all of SNC's outstanding promissory notes. The Company expects to recognize a gain or loss on settlement of the SNC Notes, in its consolidated financial statements for the period ending *March 31, 2026,*upon completion of a *third* party valuation of the Series D Convertible Preferred Stock.\n\n \n\nOn *March 3, 2026,*a number of accredited investors agreed to extend their existing notes in the aggregate amount of $1,025,000 to the earlier of *September 3, 2026*or the date on which proceeds from a capital raise equals or exceeds $5,000,000, in exchange for increasing the aggregate outstanding note balance to $1,111,224.\n\n \n\nOn *March 31, 2026,*the Company issued 684 shares of Series E Convertible Preferred Stock (the “Series E”) as total repayment for, and the replacement and cancellation of, *two* outstanding promissory notes in the aggregate amount of $684 thousand.\n\n \n\nExecutive Officer Resignation.  On *February 13, 2026,*David Farrell resigned as Chief Commercial Officer of the Company, effective immediately.\n\n \n\n*March 3, 2026*Funding:\n\n \n\n*Subscription Agreements*\n\n \n\nOn *March 3, 2026,*we entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “Purchasers”) pursuant to which the Company’s wholly owned subsidiary, Alt Alliance LLC (“AltA”), sold in a private placement (the “Offering”), unsecured 20% original issue discount secured promissory notes with an aggregate principal amount of $1,250,000 (the “Notes”). The Subscription Agreements also provide for the issuance of an aggregate of 2,625 shares of the Company’s Series C Convertible Preferred Stock, convertible into the Company’s common stock, par value $0.0001 per share (the “Shares”) to the Purchasers. The transaction closed on *March 3, 2026 (*the “Closing Date”).\n\n \n\nThe aggregate gross proceeds to the Company will be $1,000,000, $600,000 of such proceeds were transferred on the Closing Date and the remaining amount will be transferred to the Company in *two* tranches: the *first* tranche upon the Company’s submission of an application to list on the Nasdaq Stock Market and completion of the drafting of a registration statement on Form S-*1,* and the final tranche upon the completion of the Company’s *2025* audit. Additionally, on *April 21, 2026*the Company closed an additional €200,000 investment pursuant to the terms of the Offering, and issued a €250,000 Note and 240 shares of Series C.  The Company intends to use the net proceeds from the Offering for working capital and other general corporate purposes.\n\n \n\n*Original Issue Discount Secured Promissory Notes*\n\n \n\nThe Notes were issued with an original issue discount of 20%. *No* interest shall accrue on the Notes. The Notes mature upon the earlier of i) *six* months from the Issue Date, or ii) the date on which proceeds from a capital raise equals or exceeds $5,000,000.\n\n \n\nThe Notes are secured by a *first*-priority pledge of *100%* of the membership interests of AltA held by the Company, pro rata among the holders of the Notes, pursuant to the Pledge Agreement.\n\n \n\nThe Notes contain certain Events of Default, including but *not* limited to (i) the Company’s failure to pay any amount of principal or other amounts due under the Notes, (ii) commencement of bankruptcy proceedings by Alta if they remain undismissed for *60* days, (iii) the dissolution of the Company or Alta, and (iv) any breach or failure to comply with any provision of the Note if it remains uncured for *60* days. 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\nIntercompany Transfer of EverOn Energy LLC (“EverOn”)\n\n \n\nOn *March 24, 2026,*the Company transferred its 51% membership interest in EverOn to its wholly owned subsidiary, Alt Alliance LLC.\n\n \n\n*March 27, 2026*Subscription Agreement:\n\n \n\nOn *March 27, 2026 *the Company entered into a subscription agreement (the “Subscription Agreement”) with a certain *third* party accredited investor (the “Purchaser”) pursuant to which the Company sold in a private placement (the “Offering”) an aggregate of 2,150 shares of the Company’s Series D Convertible Preferred Stock, convertible into the Company’s common stock, par value $0.0001 per share (the “Shares”) to the Purchaser. The transaction closed on *March 27, 2026 (*the “Closing Date”). The aggregate gross proceeds to the Company were $1,000,000, all of which were transferred on the Closing Date. The Company intends to use the net proceeds from the Offering for working capital and other general corporate purposes.\n\n \n\n*Put Option Agreement*\n\n \n\nSimultaneously with the *March 27, 2026*Subscription Agreement, the Company also entered into a Put Option Agreement with the Purchaser, pursuant to which the Purchaser has the right, for a period of one year after the Company raises a minimum of $8 million through an equity capital raise, to require the Company to repurchase up to a maximum of 1,150 Series D shares at a price of $1,000 per Series D share repurchased.\n\n \n\nSeries D Convertible Preferred Stock:\n\n \n\nOn *March 27, 2026,*the board of directors (the “Board”) of the Company declared the formation of an aggregate of up to 20,000 shares of Series D Convertible Preferred Stock, par value $0.0001 per share (“Series D”). The Company has filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of the State of Delaware therein establishing the Series D Convertible Preferred Stock and describing the rights, obligations and privileges of the Series D. Concurrently, the Company issued 2,150 shares of Series D to the Purchaser and debt holder on the same date, in book-entry form. The following description of the Series D does *not* purport to be complete and is qualified in its entirety by reference to the Certificate of Designation, which is filed as an Exhibit to our Current Report on Form *8K* filed on *April 2, 2026.*\n\n \n\nF-\n*45*\n\n[Table of Contents](#toc)\n\n \n\n*General*. The Series D consists of a total of 20,000 shares authorized and 9,733 shares issued as of the date of this Report. Each share of Series D has a par value of $0.0001 per share and a value of $1,000 per share. The Series D has *no* stated maturity and is *not* subject to any sinking fund.\n\n \n\n*Conversion Right*. Each share of Series D shall convert into a number of fully paid and non-assessable shares of Common Stock equal to the value of each share ($1,000) divided by the Conversion Price in effect at the time of conversion, at the option of the Holder, at or after *one* year from the issuance date. The Conversion Price is $0.10 per share, subject to adjustment in accordance with the Certificate of Designation.\n\n \n\n*Adjustments of Conversion Price*. If, during the period of *twelve* months from the issuance date, the Company has issued any shares of Common Stock or convertible preferred stock (or any securities convertible into or exercisable for Common Stock) at a price per share less than the then-effective Conversion Price (the \"Original Conversion Price\") of the Series D (a \"Dilutive Issuance\"), then the Original Conversion Price shall be reduced to the lowest price per share of Common Stock or convertible preferred stock issued during this period.\n\n \n\n*Restriction on Conversion*. In *no* event shall the Holder have the right or the Company be required to convert, as applicable, shares of Series D if as a result of such conversion the aggregate number of shares of Common Stock beneficially owned by such Holder and its Affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the shareholder for purposes of Section *13*(d) of the *1934* Act, would exceed 9.99% of the outstanding shares of the Common Stock following such conversion.\n\n \n\n*Restriction on Sales*. Beginning on the month after the Holder is able to convert the Series D and utilize an exemption under SEC Rule *144,* the Holder *may*sell a maximum amount of Common Shares per month *not* to exceed the average daily volume of the Company’s common stock in the prior month.\n\n \n\n*Voting Rights*. Each holder of Series D has full voting rights and powers equal to the voting rights and powers of holders of common stock, and for so long as Series D is issued and outstanding, the holders of Series D shall vote together as a single class with the holders of the Company’s common stock and the holders of any other class or series of shares entitled to vote on all such matters equal to the number of whole shares of Common Stock into which the shares of Series D Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. (For avoidance of doubt, voting rights are on an ‘as-converted’ basis.)\n\n \n\n*Dividend Rights*. The holders of Series D, as such, will *not* be entitled to receive dividends of any kind.\n\n \n\n*Liquidation Preference*. The holders of Series D shall be entitled to receive distributions in the event of any liquidation, dissolution or winding up of the Company pari passu with the Common Stock.\n\n \n\nSeries E Convertible Preferred Stock:\n\n \n\nOn *March 31, 2026,*the board of directors (the “Board”) of the Company declared the formation of an aggregate of up to 20,000 shares of Series E Convertible Preferred Stock, par value $0.0001 per share (“Series E”). The Company has filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of the State of Delaware therein establishing the Series E Convertible Preferred Stock and describing the rights, obligations and privileges of the Series E. Concurrently, the Company issued 684 shares of Series E to an accredited debt holder on the same date, in book-entry form. The following description of the Series E does *not* purport to be complete and is qualified in its entirety by reference to the Certificate of Designation, which is filed as an Exhibit to our Current Report on Form *8K* filed on *April 2, 2026.*\n\n \n\n*General*. The Series E consists of a total of 20,000 shares authorized and 684 shares issued as of the date of this Report. Each share of Series E has a par value of $0.0001 per share and a value of $1,000 per share. The Series E has *no* stated maturity and is *not* subject to any sinking fund.\n\n \n\n*Conversion Right*. Each share of Series E shall convert into a number of fully paid and non-assessable shares of Common Stock equal to the value of each share ($1,000) divided by the Conversion Price in effect at the time of conversion, at the option of the Holder, at or after the issuance date. The Conversion Price is $0.10 per share, subject to adjustment in accordance with the Certificate of Designation.\n\n \n\n*Adjustments of Conversion Price*. If, during the period of *twelve* months from the issuance date, the Company has issued any shares of Common Stock or convertible preferred stock (or any securities convertible into or exercisable for Common Stock) at a price per share less than the then-effective Conversion Price (the \"Original Conversion Price\") of the Series E (a \"Dilutive Issuance\"), then the Original Conversion Price shall be reduced to the lowest price per share of Common Stock or convertible preferred stock issued during this period.\n\n \n\n*Restriction on Conversion*. In *no* event shall the Holder have the right or the Company be required to convert, as applicable, shares of Series E if as a result of such conversion the aggregate number of shares of Common Stock beneficially owned by such Holder and its Affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the shareholder for purposes of Section *13*(d) of the *1934* Act, would exceed 4.99% of the outstanding shares of the Common Stock following such conversion.\n\n \n\n*Piggyback Registration Rights.* Each holder of Series E has the right to include the shares of common stock underlying the Series E in any registration statement on SEC Form S-*1* that the Company *may*file.\n\n \n\n*Voting Rights*. Each holder of Series E has full voting rights and powers equal to the voting rights and powers of holders of common stock, and for so long as Series E is issued and outstanding, the holders of Series E shall vote together as a single class with the holders of the Company’s common stock and the holders of any other class or series of shares entitled to vote on all such matters equal to the number of whole shares of Common Stock into which the shares of Series E Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. (For avoidance of doubt, voting rights are on an ‘as-converted’ basis.)\n\n \n\n*Dividend Rights*. The holders of Series E, as such, will *not* be entitled to receive dividends of any kind.\n\n \n\n*Liquidation Preference*. The holders of Series E shall be entitled to receive distributions in the event of any liquidation, dissolution or winding up of the Company pari passu with the Common Stock.\n\n \n\nF-\n*46*\n\n[Table of Contents](#toc)"}