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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED September ~~JUNE~~ 30, 2025

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

FOR THE TRANSITION PERIOD FROM _________ to __________

COMMISSION FILE NUMBER 001-41306

ALTERNUS CLEAN ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware		87-1431377
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

17 State Street, Suite 4000 New York, NY 10004		(212) 739-0727
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	ALCE	~~OTCQB~~OTC Pink Market
Warrants, each whole warrant exercisable into one share of Common Stock	ACLEW	OTC Pink Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of ~~November~~April 324, ~~2025~~2026, the registrant had a total of ~~690~~724,~~242~~ 658 shares of its common stock, par value $0.0001 per share, issued and outstanding.

Table of Contents

ALTERNUS CLEAN ENERGY, INC.

INDEX TO FORM 10-Q

	Page #
PART I - FINANCIAL INFORMATION	1
Item 1. Financial Statements (Unaudited)	1
Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	1
Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024	2
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	2
Consolidated Statements of Stockholders’ Equity/(Deficit) for the Three and Six Months Ended June 30, 2025 and 2024.	3
Consolidated Statements of Stockholders’ Equity/(Deficit) for the Three and Nine Months Ended September 30, 2025 and 2024	3
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024	4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	5
Notes to Consolidated Financial Statements	67
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3745
Item 3. Quantitative and Qualitative Disclosures About Market Risk	5866
Item 4. Controls and Procedures	5866
PART II - OTHER INFORMATION	6068
Item 1. Legal Proceedings	6068
Item 1A. Risk Factors	6169
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	6169
Item 3. Defaults Upon Senior Securities	6270
Item 4. Mine Safety Disclosures	6270
Item 5. Other Information	6270
Item 6. Exhibits	6371
Signatures	6573

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC, as well as in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after completion of this Quarterly Report on Form 10-Q to conform these statements to actual results or revised expectations.

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

	As of June 30,			As of December 31,
	As of			As of
	September 30,			December 31,
	2025			2024
ASSETS
Current Assets
Cash and cash equivalents	$	1039		$	161
Prepaid expenses and other current assets		-			131
Taxes recoverable		69			347
Due from related party		1,110			-
Total Current Assets		48			639
Total Current Assets		1,126			639
Capitalized costs		-			4,775
Capitalized development costs		3,162			4,775
Intangible assets		37,980			1,554
Intangible assets		-			1,554
Goodwill		18,964			241
Goodwill		-			241
Long-term prepaid expenses		518			518
Total Assets	$	457,~~806~~510		$	7,727
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	68,~~626~~445		$	9,799
Accrued liabilities		23,~~790~~262			2,371
Taxes payable		-			14
Operating lease liability		-			28
Short term convertible and non-convertible promissory notes, net of debt issuance costs		9,105			24,851
Convertible notes measured at fair value		8,813			1,702
Convertible notes measured at fair value		1,601			1,702
Short term convertible and non-convertible promissory notes, net of debt issuance costs		7,908			24,851
Derivative liability - warrants		~~591~~1,268			811
Other payables		5,~~229~~188			-
Total Current Liabilities		2534,~~942~~884			39,576
Long term convertible and non-convertible promissory notes, net of debt issuance costs		-			1,629
Operating lease liability, net of current portion		-			407
Total Liabilities		2534,~~942~~884			41,612
Shareholders’ Deficit
Preferred stock, $0.0001 par value, 1,000,000 authorized as of June 30, 2025 and December 31, 2024. 60,000 issued and outstanding as of June 30, 2025 and 0 as at December 31, 2024.		60			-
Series A Preferred stock, $0.0001 par value, 60,000 authorized as of September 30, 2025 and December 31, 2024. 60,000 issued and outstanding as of September 30, 2025 and 0 as at December 31, 2024.		60			-
Common stock, $0.0001 par value, 600,000,000 authorized as of June 30, 2025 and 300,000,000 authorized as of December 31, 2024; 628,092 issued and outstanding as of June 30, 2025 and 25,189 issued and outstanding as of December 31, 2024.		-			-
Series B Preferred stock, $0.0001 par value, 21,150 authorized as of September 30, 2025 and December 31, 2024. 21,150 issued and outstanding as of September 30, 2025 and 0 as at December 31, 2024.		32,278			-
Additional paid in capital		43,367			35,927
Common stock, $0.0001 par value, 600,000,000 authorized as of September 30, 2025 and 300,000,000 authorized as of December 31, 2024; 690,283 issued and outstanding as of September 30, 2025 and 25,189 issued and outstanding as of December 31, 2024.		0			-
Foreign currency translation reserve		(2,485	)		(2,679	)
Additional paid in capital		44,289			35,927
Accumulated deficit		(62,078	)		(67,133	)
Foreign currency translation reserve		(2,585	)		(2,679	)
Total Shareholders’ Deficit		(21,136	)		(33,885	)
Accumulated deficit		(71,827	)		(67,133	)
Total Liabilities and Shareholder’ Deficit	$	4,806		$	7,727
Shareholders’ Equity (Deficit) attributable to parent		2,215			(33,885	)
Noncontrolling interest		20,411			-
Total Shareholders’ Equity (Deficit)		22,626			(33,885	)
Total Liabilities and Shareholder’ Equity (Deficit)	$	57,510		$	7,727

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

(Unaudited)

	Three Months Ended June 30						Six Months Ended June 30
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024
Revenues	$	-		$	9493		$	-		$	~~187~~280
Operating Expenses
Cost of revenues		-			(~~159~~47	)		-			(~~174~~71	)
Selling, general and administrative		(~~3,689~~984	)		(21,~~781~~524	)		(56,~~179~~163	)		(57,~~888~~204	)
Depreciation, amortization, and accretion		-			(5052	)		(130	)		(~~120~~175	)
Development costs		-			-(741	)		-			(7748	)
Gain on sale of subsidiaries		~~11,924~~-			-			15,513			-
Total operating income/ (expenses)		~~8,235~~(984	)		(2,~~990~~364	)		109,~~204~~220			(68,~~189~~198	)
Income/(loss) from operations		~~8,235~~(984	)		(2,~~896~~271	)		109,~~204~~220			(67,~~002~~918	)
Other income/(expense):
Interest expense		(~~1,250~~399	)		(~~809~~1,572	)		(3,~~440~~839	)		(24,~~264~~854	)
Fair value movement of FPA Asset		-			-			-			(483	)
Fair value movement of convertible debt		(882	)		(182	)		(887	)		(182	)
Fair value movement of convertible notes		(1,377	)		1,079			(2,263	)		898
Debt restructuring costs		~~(753~~-	)		-			(753	)		-
Fair value movement of warrants		162			-			162			5
Fair value movement of warrant derivative liability		(676	)		-			(514	)		-
Gain on extinguishment of debt		-			-			-			179
Gain on settlement of payables		426			-			426			-
Other expense		(232	)		-			(232	)		(231	)
Loss on settlement of liabilities		(151	)		-			(151	)		-
Other income		(46	)		3			-			7
Loss on settlement of SAA with Hover		(2,025	)		-			(2,025	)		-
Loss on issuance of debt		-(19	)		~~(948~~-	)		-(19	)		(948	)
Total other expenses		(3,001	)		(1,936	)		(5,150	)		(3,917	)
Loss on extinguishment of debt		(3,404	)		-			(3,404	)		179
Income / (Loss) before provision for income taxes		5,234			(4,832	)		5,054			(9,919	)
Provision for loss from related party		(1,139	)		-			(1,139	)		-
Income / (Loss) from continuing operations		5,234			(4,832	)		5,054			(9,919	)
Other expense		-			-			(232	)		(8	)
Other income		-			64			-			67
Total other expenses		(8,765	)		(429	)		(13,914	)		(5,149	)
Income / (Loss) before provision for income taxes		(9,749	)		(2,700	)		(4,694	)		(13,067	)
Income taxes		-			-			-			-
Income / (Loss) from continuing operations		(9,749	)		(2,700	)		(4,694	)		(13,067	)
Discontinued operations:
Loss from operations of discontinued business component		-			(2,020	)		-			(5,662	)
Gain/(loss) from operations of discontinued business component		-			(1,735	)		-			(6,950	)
Gain on sale of discontinued operations, net assets		-			15			-			2,165
Gain/(loss) on sale of discontinued operations, net assets		-			(635	)		-			1,531
Income/(loss) from discontinued operations		-			(2,~~005~~370	)		-			(35,~~497~~419	)
Net income /(loss)	$	5,234		$	(6,837	)	$	5,054		$	(13,416	)
Net income/(loss) for the period	$	(9,749	)	$	(5,070	)	$	(4,694	)	$	(18,486	)
Comprehensive income / (loss):
Net income / (loss)	$	5,234		$	(6,837	)	$	5,054		$	(13,416	)
Foreign currency translation adjustment		731			512			195			(720	)
Comprehensive income/(loss)	$	5,965		$	(6,325	)	$	5,249		$	(14,136	)
Basic & diluted earnings/(loss) per share of common stock:
Continuing operations, basic		10.95			(365.31	)		19.16			(749.91	)
Continuing operations, basic and diluted		(14.48	)		(163.08	)		(11.69	)		(789.26	)
Continuing operations, diluted		7.12			(365.31	)		19.10			(749.91	)
Discontinued operations, basic and diluted		-			(143.15	)		-			(327.31	)
Discontinued operations, basic		-			(151.58	)		-			(264.39	)
Total loss per share of common stock, basic and diluted		(14.48	)		(306.23	)		(11.69	)		(1,116.58	)
Discontinued operations, diluted		-			(151.58	)		-			(264.39	)
Weighted-average common stock outstanding, basic & diluted		673,133			16,556			401,699			16,556
Total earnings/(loss) per share of common stock, basic		10.95			(516.90	)		19.16			(1,014.29	)
Comprehensive income / (loss):
Total earnings/(loss) per share of common stock, diluted		7.12			(516.90	)		19.10			(1,014.29	)
Net income / (loss)		(9,749	)		(5,070	)		(4,694	)		(18,486	)
Weighted-average common stock outstanding, basic		477,867			13,227			263,732			13,227
Foreign currency translation adjustment		(100	)		(2,659	)		94			(3,379	)
Weighted-average common stock outstanding, diluted		944,154			13,227			264,558			13,227
Comprehensive income/(loss)	$	(9,849	)	$	(7,729	)	$	(4,600	)	$	(21,865	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(Unaudited)

	Preferred Stock				Common Stock				Additional Paid-In		Foreign Currency Translation			Accumulated			Total Shareholders’
											Foreign						Shareholders
	Shares		Amount		Shares		Amount		Capital		Reserve			Deficit			Equity
									Additional		Currency						Equity					Total
Balance at March 31, 2024		-	$	-		16,279	$	-	$	28,052	$	(4,156	)	$	(94,790	)	$	(70,894	)
	Preferred Stock				Common Stock				Paid-In		Translation			Accumulated			Attributable			Noncontrolling		Shareholders’
Stock Compensation for Third Party Services		-		-		86		-		151		-			-			151
	Shares		Amount		Shares		Amount		Capital		Reserve			Deficit			to Parent			Interest		Equity
Foreign currency translation adjustment		-		-		-		-		-		512			-			512
Balance at June 30, 2024		-	$	-		3,273,067	$	8	$	28,195	$	(3,644	)	$	(101,627	)	$	(77,068	)	$	-	$	(77,068	)
Net Loss		-		-		-		-		-		-			(6,837	)		(6,837	)
Conversion of Debt		-		-		18,456		-		108		-			-			108					108
Balance at June 30, 2024		-	$	-		16,365	$	-	$	28,203	$	(3,644	)	$	(101,627	)	$	(77,068	)
Shares Issued for Joint Venture Agreement		-		-		200,000		1		2,000		-			-			2,001					2,001
Foreign currency translation adjustment		-		-		0		-		-		(2,659	)		-			(2,659	)				(2,659	)
Net Loss		-		-		-		-		-		-			(5,070	)		(5,070	)				(5,070	)
Balance at September 30, 2024		-	$	-		3,491,523	$	9	$	30,303	$	(6,303	)	$	(106,697	)	$	(82,688	)	$	-	$	(82,688	)

	Preferred Stock				Common Stock					Additional Paid-In			Foreign Currency Translation			Accumulated			Total Shareholders’
													Foreign						Shareholders
	Shares		Amount		Shares			Amount		Capital			Reserve			Deficit			Equity
										Additional			Currency						Equity					Total
Balance at March 31, 2025		10,000	$	60		50,741		$	-	$	39,108		$	(3,215	)	$	(67,313	)	$	(31,360	)
	Preferred Stock				Common Stock					Paid-In			Translation			Accumulated			Attributable			Noncontrolling		Shareholders’
Stock compensation		-		-		262,500			-		2,100			-			-			2,100
	Shares		Amount		Shares			Amount		Capital			Reserve			Deficit			to Parent			Interest		Equity
Shares issued related party		-		-		201,600			-		1,417			-			-			1,417
Balance at June 30, 2025		60,000	$	60		628,092		$	0	$	43,367		$	(2,485	)	$	(62,078	)	$	(21,135	)	$	-	$	(21,135	)
Shares Issued to third party for services		-		-		33,750			-		271			-			-			271
Stock compensation		-		-		-			-		-			-			-			-			-		-
Shares Issued under 3a(10) debt settlement		-				20,000			-		172			-			-			172
Shares issued related party		-		-		-			-		-			-			-			-			-		-
Shares issued for Debt Issuance Costs		-				31,250			-		250			-			-			250
Shares issued in conversion of debt		-		-		62,191			0		62			-			-			62			-		62
Shares Returned on Recission of Liion Acquisition		-				(1,250	)		-		(10	)		-			-			(10	)
Consideration for EverOn transaction		21,150		32,278		-			-		860			-			-			33,138			20,411		53,549
Shares issued in conversion of debt		-				29,500			-		58			-			-			58
Foreign currency translation adjustment		-		-		-			-		-			(100	)		-			(100	)		-		(100	)
Issuance of Preferred equity shares to Officer		50,000		-		-			-		-			-			-			-
Net Loss in period		-		-		-			-		-			-			(9,749	)		(9,749	)		-		(9,749	)
Foreign currency translation adjustment		-		-		-			-		-			731			-			731
Balance at September 30, 2025		81,150	$	32,338		690,283		$	0	$	44,289		$	(2,585	)	$	(71,827	)	$	2,215		$	20,411	$	22,626
Net Loss in period		-		-		-			-		-			-			5,234			5,234
Balance at June 30, 2025		60,000	$	60		628,092		$		$	43,367		$	(2,484	)	$	(62,078	)	$	(21,136	)

	Preferred Stock				Common Stock				Additional Paid-In			Foreign Currency Translation			Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital			Reserve			Deficit			Equity
Balance at January 1, 2024		-	$	-		14,381	$	-	$	27,881		$	(2,924	)	$	(88,211	)	$	(63,254	)
Settlement of related party debt for shares		-		-		1,598		-		9,658			-			-			9,658
Shares issued for Conversion of Debt		-		-		264		-		1,029			-			-			1,029
Merger Costs – Settlement of Related Party Debt and stock		-		-		-		-		(10,633	)		-			-			(10,633	)
Stock Compensation for Third Party Services		-		-		122		-		268			-			-			268
Foreign currency translation adjustment		-		-		-		-		-			(720	)		-			(720	)
Net Loss		-		-		-		-		-			-			(13,416	)		(13,416	)
Balance at June 30, 2024		-	$	-		16,365	$	-	$	28,203		$	(3,644	)	$	(101,627	)	$	(77,068	)

	Preferred Stock				Common Stock					Additional Paid-In			Foreign Currency Translation			Accumulated			Total Shareholders’
	Shares		Amount		Shares			Amount		Capital			Reserve			Deficit			Equity
Balance at January 1, 2025		-	$	-		25,189		$	-	$	35,927		$	(2,679	)	$	(67,133	)	$	(33,885	)
Shares issued for Conversion of Debt		-		-		44,184			-		2,261			-			-			2,261
Settlement of Payables for Shares		-		-		3,239			-		415			-			-			415
Shares issued for Debt Issuance Costs		-		-		38,880			-		813			-			-			813
Stock compensation		-		-		262,500			-		2,100			-			-			2,100
Shares issued related party		-		-		201,600			-		1,417			-			-			1,417
Shares Issued to third party for services		-		-		33,750			-		271			-			-			271
Shares Issued under 3a(10) debt settlement		-		-		20,000			-		172			-			-			172
Shares Returned on Recission of Liion Acquisition		-		-		(1,250	)		-		(10	)		-			-			(10	)
Issuance of Preferred equity shares to Officer		60,000		60		-			-		-			-			-			60
Foreign currency translation adjustment		-		-		-			-		-			195			-			195
Net Loss		-		-		-			-		-			-			5,504			5,054
Balance at June 30, 2025		60,000	$	60		628,092		$	-	$	43,367		$	(2,484	)	$	(62,078	)	$	(21,136	)

The accompanying notes are an integral part of these consolidated financial statements.

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ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(Unaudited)

												*Foreign*						*Shareholders*
									*Additional*			*Currency*						*Equity*					*Total*
	*Preferred Stock*				*Common Stock*				*Paid-In*			*Translation*			*Accumulated*			*Attributable*			*Noncontrolling*		*Shareholders’*
	*Shares*		*Amount*		*Shares*		*Amount*		*Capital*			*Reserve*			*Deficit*			*to Parent*			*Interest*		*Equity*
Balance at January 1, 2024		-	$	-		2,876,215	$	7	$	27,874		$	(2,924	)	$	(88,211	)	$	(63,254	)	$	-	$	(63,254	)
Settlement of related party debt for shares		-		-		319,600		1		9,657			-			-			9,658			-		9,658
Conversion of Debt		-		-		71,256		-		1,137			-			-			1,137			-		1,137
Merger Costs – Settlement of Related Party Debt and Conversion of Debt		-		-		-		-		(10,633	)		-			-			(10,633	)		-		(10,633	)
Stock Compensation for Third Party Services		-		-		24,452		-		268			-			-			268			-		268
Shares Issued for Joint Venture Agreement		-		-		200,000		1		2,000			-			-			2,001			-		2,001
Foreign currency translation adjustment		-		-		-		-		-			(3,379	)		-			(3,379	)		-		(3,379	)
Net Loss		-		-		-		-		-			-			(18,486	)		(18,486	)		-		(18,486	)
Balance at September 30, 2024		-	$	-		3,491,523	$	9	$	30,303		$	(6,303	)	$	(106,697	)	$	(82,688	)	$	-	$	(82,688	)

													*Foreign*						*Shareholders*
										*Additional*			*Currency*						*Equity*					*Total*
	*Preferred Stock*				*Common Stock*					*Paid-In*			*Translation*			*Accumulated*			*Attributable*			*Noncontrolling*		*Shareholders’*
	*Shares*		*Amount*		*Shares*			*Amount*		*Capital*			*Reserve*			*Deficit*			*to Parent*			*Interest*		*Equity*
Balance at January 1, 2025		-	$	-		25,189		$	-	$	35,927		$	(2,679	)	$	(67,133	)	$	(33,885	)	$	-	$	(33,885	)
Shares issued for Conversion of Debt		-		-		106,375			-		2,325			-			-			2,325			-		2,325
Settlement of Payables for Shares		-		-		3,239			-		415			-			-			415			-		415
Shares issued for Debt Issuance Costs		-		-		38,880			-		813			-			-			813			-		813
Stock compensation		-		-		262,500			-		2,100			-			-			2,100			-		2,100
Shares issued related party		-		-		201,600			-		1,417			-			-			1,417			-		1,417
Shares Issued to third party for services		-		-		33,750			-		270			-			-			270			-		270
Shares Issued under 3a(10) debt settlement		-		-		20,000			-		172			-			-			172			-		172
Shares Returned on Recission of Liion Acquisition		-		-		(1,250	)		-		(10	)		-			-			(10	)		-		(10	)
Issuance of Preferred equity shares to Officer		60,000		60		-			-		-			-			-			60			-		60
Consideration for EverOn transaction		21,150		32,278		-			-		860			-			-			33,138			20,411		53,549
Foreign currency translation adjustment		-		-		-			-		-			94			-			94			-		94
Net Loss		-		-		-			-		-			-			(4,694	)		(4,694	)		-		(4,694	)
Balance at September 30, 2025		81,150	$	32,338		690,283		$	-	$	44,289		$	(2,585	)	$	(71,827	)	$	2,215		$	20,411	$	22,626

The accompanying notes are an integral part of these consolidated financial statements.

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ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share and per share data)

(Unaudited)

	Six Months Ended June 30,
	Nine Months Ended
	September 30,
	2025			2024
Cash Flows from Operating Activities
Net income/(loss)	$	5(4,~~054~~694	)	$	(1318,~~416~~486	)
Income/(loss) from discontinued operations, net of tax		-			35,~~497~~419
Loss from continuing operations	$	5(4,~~054~~694	)	$	(913,~~919~~067	)
Adjustments to reconcile loss from continuing operations to net cash provided by/(used in) operations:
Depreciation, amortization and accretion		130			~~120~~175
Amortization of debt discount		1,~~837~~972			1,~~395~~767
Stock compensation costs		12,~~934~~160			-
Credit loss expense		-			42
Share-based compensation to third parties		443			268
Gain (loss) on foreign currency exchange rates		(495	)		668
Gain on foreign currency exchange rates		258			(119	)
Fair value movement of FPA asset		-			483
Fair value movement of convertible debt		~~887~~2,263			~~177~~(603	)
Debt restructuring costs		753			-
Fair value movement in warrant liability		~~(162~~514	)		5(295	)
Loss on issuance of debt		-19			948
Gain on extinguishment of debt		-			(179	)
(Gain) / loss on debt settlement		(311	)		-
(Gain)/loss on sale of subsidiaries		(15,513	)		-
(Gain)/loss on debt extinguishment		3,404			(179	)
Non-cash operating lease assets		-			-
Loss on settlement of SAA		2,025			-
Impairment of amounts due from related party		1,139			-
Development costs		-			748
(Gain)/loss on disposal of assets		(15,513	)		1,378
Non-cash operating lease assets		-			23
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable and other short-term receivables		-			~~(252~~2,000	)
Prepaid expenses and other assets		~~100~~114			~~537~~(31	)
Accounts payable		~~1,152~~766			24,~~317~~595
Accrued liabilities		12,~~828~~237			~~427~~(121	)
Operating lease liabilities		-			(923	)
Payable to related party		204			590
Related party		-			231
Net Cash provided by/(used in) Operating Activities	$	(12,~~848~~321	)	$	(21,~~420~~820	)
Net Cash provided by/(used in) Operating Activities - Discontinued Operations		-			(64,~~131~~579	)
Cash Flows from Investing Activities:
Purchases of property and equipment		-			(1,504	)
Sales of property and equipment		-			-
Capitalized Cost		-			(177	)
Capitalized Cost		-			(103	)
Construction in Process		-			(4,863	)
Construction in Process		-			(3,253	)
Net Cash provided by/(used in) Investing Activities	$	-		$	(6,544	)
Net Cash provided by/(used in) Investing Activities	$	-		$	(4,860	)
Net Cash provided by/(used in) Investing Activities - Discontinued Operations		-			69,019
Net Cash provided by/(used in) Investing Activities - Discontinued Operations		-			66,908
Cash Flows from Financing Activities:
Proceeds from debt		12,~~716~~219			23,~~684~~229
Payments of debt principal		(21	)		-(2,471	)
Proceeds from issuance of share capital		-			570
Repayments of shareholder loans		-			(120	)
Contributions from parent		-			950
Proceeds from issuance of share capital		-			26
Net Cash provided by/(used in) Financing Activities	$	12,~~695~~198		$	~~4,204~~664
Net Cash provided by/(used in) Financing Activities - Discontinued Operations		-			(80,~~495~~422	)
Effect of exchange rate on cash		1			~~(676~~124	)
Net increase/(decrease) in cash, cash equivalents and restricted cash	$	(~~151~~123	)	$	(23,~~470~~558	)
Cash, cash equivalents, and restricted cash beginning of the year		161			24,563
Cash, cash equivalents, and restricted cash end of the period	$	1039		$	1,~~093~~005

The accompanying notes are an integral part of these consolidated financial statements

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ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED SUPPLEMENTAL STATEMENTS OF CASH FLOW

(Unaudited)

	Six Months Ended June 30,
	Nine Months Ended
	September 30,
	2025		2024
	(in thousands)
Supplemental Cash Flow Disclosure
Cash paid during the period for:
Interest (net of capitalized interest of $568 and $2,372 respectively)	$	-	$	4,397
Interest	$	-	$	3,197
Taxes		-		~~524~~521
Non-cash investing and financing activities:
Shares issued for conversion of debt		2,325		1,137
Shares issued for settlement of debt		415		9,836
Shares issued for conversion of debt		2,261		1,029
Shares issued as compensation to third parties		171		268
Shares issued for debt issuance costs		814		-
Shares issued for JV with Hover		-		2,000
Shares issued for stock compensation to third parties		230		268
10,000 Preferred Shares issued to officer		60		-
Fair value of Series B Preferred Shares issued for SAA settlement		1,755		-
Fair value of Series B Preferred Shares issued for business combination		30,523		-
Noncash reduction of debt and non-current lease liability from sale of Spanish subsidiary		3,197		-

The accompanying notes are an integral part of these consolidated financial statements

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ALTERNUS CLEAN ENERGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Formation

Alternus Clean Energy, Inc. (the “Company”) was incorporated in Delaware on May 14, 2021 and was originally known as Clean Earth Acquisitions Corp. (“Clean Earth”).

On 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 11,500 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.

Clean 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 U.S. 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 was considered the accounting acquirer and these consolidated financial statements represent a continuation of the consolidated financial statements of the AEG Acquired Subsidiaries. Assets and liabilities of AEG are presented at their historical carrying values.

Alternus Clean Energy Inc. is a holding company that operates through the following 8 subsidiaries as of September ~~June~~ 30, 2025:

Subsidiary	Principal Activity	Date Acquired / Established	ALTN Ownership	Country of Operations
	Principal	Date Acquired /		Country of
Subsidiary	Activity	Established	ALTN Ownership	Operations
Alternus Europe Limited f/k/a AEG JD 03 Limited	Holding Company	21 March 2022	Alternus Lux 01 S.a.r.l.	Ireland
Alternus LUX 01 S.a.r.l.	Holding Company	5 October 2022	Alternus Clean Energy, Inc.	Luxembourg
Alt Alliance LLC	Holding Company	September 2023	Alternus Clean Energy, Inc.	USA
AEG MH 04 Limited	Holding Company	16 January 2024	Alternus Lux 01 S.a.r.l.	Ireland
ALT POL HC 02 sp. z.o.o.	Holding Company	20 January 2023	Alternus Europe Limited	Poland
ALANTEAN LLC	Joint Venture ~~LLC Partnership~~	10 April 2024	Alt Alliance LLC	USA
BESS LLC	Holding Company	10 December 2024	Alternus Clean Energy, Inc.	USA
EverOn Energy LLC	~~Holding~~Joint ~~Company~~Venture	24 March 2025	Alternus Clean Energy, Inc.	USA

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2. Going Concern and Management’s Plans

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the ~~Condensed~~ Consolidated Financial Statements are issued. Based on its recurring losses from operations since inception and continued cash outflows from operating activities (all as described below), the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these ~~Condensed~~ Consolidated Financial Statements were issued.

The 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 ~~during the period ended June 30~~, ~~2025,~~ the Company had a net ~~income~~ loss from continuing operations of approximately ($59.1 7) million and ~~net loss from continuing operations of approximately $~~(9$4.97) million for the ~~six~~three and nine months ended September ~~June~~ 30, 2025 ~~and 2024,~~ respectively. The Company had total shareholders’ equity~~/(deficit)~~ of $~~(21~~22.1) 6 million as of September ~~June~~ 30, 2025 , of which $2.2 million is attributable to the Parent, and a deficit of $(33.9) million as of December 31, 2024. The Company had approximately $039,000 ~~million~~ of unrestricted cash on hand as of September ~~June~~ 30, 2025.

Our operating revenues are insufficient to fund our operations and our assets already are pledged to secure our indebtedness to various third party secured creditors, respectively. The unavailability of additional financing could require us to delay, scale back, or terminate our acquisition efforts and other core business activities, which would have a material adverse effect on the Company and its viability and prospects.

The terms of our indebtedness, including the covenants and the dates on which principal and interest payments on our indebtedness are due, increases the risk that we will be unable to continue as a going concern. To continue as a going concern over the next twelve months, we must make payments on our debt as they come due and comply with the covenants in the agreements governing our indebtedness or, if we fail to do so, to (i) negotiate and obtain waivers of or forbearances with respect to any defaults that occur with respect to our indebtedness, (ii) amend, replace, refinance, or restructure any or all of the agreements governing our indebtedness, and/or (iii) otherwise secure additional capital. However, we cannot provide any assurances that we will be successful in accomplishing any of these plans.

On February 10, 2025, the Company received a determination letter (the “Delisting Notification”) from the Nasdaq Hearings Advisor stating that the Panel determined to delist the Company’s common stock, par value $0.0001 per share (the “Common Stock”) from the Nasdaq Capital Market, and Nasdaq accordingly suspended trading in the Company’s Common Stock effective at the opening of trading on February 12, 2025, because the Company has not demonstrated compliance with the MVLS Rule, nor does it meet any of the alternative requirements under Nasdaq Listing Rule 5550(b) and has failed to demonstrate that additional time to regain compliance is appropriate. The Company was additionally in violation of the bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), as disclosed recently on January 31, 2025, which was taken into consideration by the Panel in its Delisting Notification.

A Form 25-NSE was filed with the Securities and Exchange Commission (“SEC”), which removed the Company’s securities from listing on Nasdaq. The Company’s Common Stock is currently quoted on the ~~OTCQB~~OTC trading market. However, there can be no assurance that the Company’s Common Stock will continue to trade on any over-the-counter trading market.

The Company is currently taking several steps to begin to alleviate the going concern issue. We are working with ~~multiple~~existing ~~global~~shareholders ~~banks~~ and various funds as well as local and international banks in an attempt secure the necessary ~~project~~ financing to execute on our ~~transatlantic~~ business plan. The Company has sold or discontinued non-strategic businesses, operations, and assets in order to eliminate significant indebtedness and has reported an improvement in shareholder equity for the nine months ended September 30, 2025.

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3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited ~~condensed~~ consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Basis of Consolidation

The consolidated financial statements include the financial statements of the Company, its wholly owned and ~~its~~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 ~~accounts~~ 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. The consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2024, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

Net Income / (Loss) Per Share

Net income / (loss) per share is computed pursuant to ASC 260, Earnings per Share. Basic net income / (loss) per share attributable to common shareholders is computed by dividing net income / (loss) attributable to common shareholders by the weighted average number of common stock outstanding for the period. Diluted net income / (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 warrants and convertible notes were excluded from the calculation of diluted net income / (loss) per share due to their anti-dilutive effect due to losses in 2024 and 2025. 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:

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Warrants		15,717		8,313		15,717		8,313
Impact of Warrants		2,826,877		-		3,578,268		-
Convertible Notes		-		-		107,519		-
2024 convertible notes		419,684		-		312,872		-
Total		15,717		8,313		123,236		8,313
OID notes		2,296,415		-		143,555		-
Total		5,542,976		-		4,034,695		-

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Stock-Based Compensation

The 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.

Use 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.

Recently Issued Not Yet Effective Accounting Standards

In 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.

In 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.

In 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.

In 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.

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4. Fair Value Measurements

Fair 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:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 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.

Level 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.

As of September ~~June~~ 30, 2025, a summary of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows, in thousands:

	Fair Value Measurement
	(in thousands)
	Level 1		Level 2		Level 3		Total
Convertible Notes	$	-	$	-	$	1,601	$	1,601
Convertible notes measured at fair value	$	-	$	-	$	8,813	$	8,813
Derivative Warrant Liability		-		-		~~591~~1,268		~~591~~1,268
Total	$	-	$	-	$	210,~~192~~080	$	210,~~192~~080

Valuation Techniques

●

Convertible Note (fair value option): Valued using unobservable inputs that are not corroborated by market data (Level 3).

●

Warrant Liability: Valued using unobservable inputs that are not corroborated by market data (Level 3).

As the remaining balances on the convertible notes issued April 19, 2024 and October 1, 2024 have identical terms and maturity dates, the Company grouped them together. The Company measures the April 19, 2024 and October 1, 2024 convertible notes, and April 19, 2024 private placement warrants using a Monte Carlo simulation valuation model and applying the following assumptions as of September ~~June~~ 30, 2025:

	Convertible Loan Notes
	Convertible
Risk-free rate		3.78	%
	Loan Notes
Underlying stock price	$	6.40
Risk-free rate		3.71	%
Underlying stock price	$	0.70
Expected volatility		55	%
Term		0.5 years
Term (years)		0.25
Dividend yield		0	%

10The Company measures the April and October private placement warrants using a Monte Carlo simulation valuation model and applying the following assumptions as of September 30, 2025:

The Company measures the April and and October private placement warrants using a Monte Carlo simulation valuation model and applying the following assumptions as of June 30, 2025:

	*Warrant*
	*Liability*
Risk-free rate		3.78	%
Underlying stock price	$	0.70
Expected volatility		55	%
Term (years)		4.81
Dividend yield		0	%

	Warrant Liability
Risk-free rate		3.78	%
Underlying stock price	$	6.40
Expected volatility		55	%
Term		4.81 years
Dividend yield		0	%

~~The following~~ ~~table presents changes of the convertible notes issued April 2024 and October 2024, and private placement warrants issued~~ ~~April~~ Table ~~2024 with significant unobservable inputs (Level 3) as~~ of ~~June~~Contents ~~30, 2025, in thousands. As~~ ~~the terms of the notes are mostly identical the Company has combined the amounts as shown below:~~

	Convertible Notes April 2024			Convertible Notes October 2024			Total
Balance at December 31, 2024	$	356			1,346			1,702
Conversions in period		-			(2,058	)		(2,058	)
Movement in fair value		(29	)		835			806
Balance at March 31, 2025		327			123		$	450
Conversions in period								(52	)
Reclass of accrued interest to convertible note								316
Movement in fair value								887
Balance at June 30, 2025							$	1,601

The following table presents changes of the convertible notes measured at fair value with significant unobservable inputs (Level 3) as of September 30, 2025. As the terms of the notes are mostly identical the Company has combined the amounts as shown below:

	Warrant Liability
	Convertible			Convertible			Convertible			OID
Balance at December 31, 2024	$	811
	Notes			Notes			Notes			Convertible
Change in fair value		(811	)
	April 2024			October 2024			Total			Notes		Total
Balance at June 30, 2025		-
	(in thousands)
Balance at December 31, 2024	$	356			1,346			1,702			-		1,702
Conversions in period		-			(2,058	)		(2,058	)		-		(2,058	)
Movement in fair value		(29	)		835			806			-		806
Balance at March 31, 2025		327			123			450			-	$	450
Conversions in period								(52	)		-		(52	)
Reclass of accrued interest to convertible note								316			-		316
Movement in fair value								887			-		887
Balance at June 30, 2025								1,601			-	$	1,601
Notes reclassified upon reevaluation of embedded features								-			1,975		1,975
Loss from extinguishment on July 1, 2025								-			3,404		3,404
New convertible notes issued at fair value								-			519		519
Conversions in period								(62	)		-		(62	)
Movement in fair value								8			1,368		1,376
Balance at September 30, 2025							$	1,547		$	7,265	$	8,813

~~The following~~Refer ~~table~~to ~~presents~~footnote ~~changes~~12 offor ~~the~~a ~~warrants~~description ~~issued~~of tothe 3ifair onvalue ~~April~~methodology ~~28,~~and ~~2025~~assumptions ~~with significant~~applied ~~unobservable~~to ~~inputs~~determine ~~(Level~~the 3)fair asvalue of ~~June~~the ~~30,~~OID ~~2025,~~Convertible ~~in thousands:~~Notes.

The following table presents changes of warrants issued with significant unobservable inputs (Level 3) as of September 30, 2025, in thousands:

	*Warrants*
	*Issued with*			*April 2025*
	*Convertible Notes*			*Warrants*			*Total*
Balance at December 31, 2024	$	811		$	-			811
Fair value of warrants issued as finance charge		-			753			753
Movement in fair value		(811	)		(162	)		(973	)
Balance at June 30, 2025	$	-		$	591		$	591
Movement in fair value		875			(198	)		677
Balance at September 30, 2025		875			393		$	1,268

Warrants Issued in April 2025:

On April 28, 2025 the Company issued warrants, as contractually adjusted due to the 2025 Stock Split, to purchase up to ~~170~~1,~~000~~ 199,295 shares of the Company’s common stock at an exercise price of $60.00 85 per share. The warrants are exercisable immediately and will expire on October 28, 2030. The warrants may be exercised on a cashless basis in the event of a fundamental transaction involving the Company or if the resale of the shares of Common Stock underlying the warrants are not covered by a registration statement. The exercise price is subject to full ratchet antidilution protection, subject to certain price limitations and certain exceptions, upon any subsequent transaction at a price lower than the exercise price then in effect and standard adjustments in the event of certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes. The ~~170~~1,~~000~~ 199,295 warrants issued to 3i contain features that independently and collectively require it to be classified as a derivative liability. As a result, the warrants must be measured at fair value at issuance and remeasured to fair value at each reporting date, with changes in value recorded in earnings. Because the warrants were issued in connection with an amendment to the 3i convertible notes which are accounted for using the fair value option, the Company initially recognized a finance charge of $753,004 the upon issuance. Periodic changes after the initial issuance are recognized through earnings.

	Warrant Liability
Debt restructuring cost	$	753
Change in fair value		(162	)
Balance at June 30, 2025		591

The 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.

5. LiiON Rescission

On 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.

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The 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.

Therefore, 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.

Upon 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.

6. ~~Prepaid~~Formation ~~Expenses~~of EverOn Energy Joint Venture and ~~Other~~Consolidation ~~Current~~of ~~Assets~~Variable Interest Entity

Background and Transaction Overview

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.).

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:

●

Hover contributed its portfolio of developed Microgrid Projects and related customer relationships in exchange for a 49% equity (“Member”) interest in the JV.

●

The 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.

●

The JV entered into (i) separate Master Services Agreements with each of the Company and Hover and (ii) an Equipment Supply Agreement with Hover.

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.

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”).

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Additionally, 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, owed to Hover under the SAA 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, resulted in a loss on settlement of the pre-existing liability amounting to $2.0 million.

In connection with the JVOA, the Company issued 20,000 shares of Series B to Hover preliminarily 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 preliminary 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 Microgrids^tm 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 initially determined the enterprise value to be approximately $56.9 million, however the final enterprise value of the JV is subject to completion and final reviews of the third party valuation.

CONSOLIDATION – VARIABLE INTEREST ENTITY

(a)

VIE Determination

The 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.

The 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.

(b)

Primary Beneficiary Determination

Under 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:

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.

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.

As 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.

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(c)

Reassessment

The 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.

(d)

Nature of Assets, Liabilities, and Restrictions

The consolidated balance sheet as of September 30, 2025 reflects the assets and liabilities of the JV based on a preliminary purchase price allocation. 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.

ACCOUNTING FOR THE ACQUISITION AS A BUSINESS COMBINATION

(a)

Application of the Acquisition Method

The 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 represented the first point in time at which (i) all three elements of a business (inputs, processes, and the ability to generate 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.

(b)

Identification and Measurement of Consideration Transferred

Under 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 (in thousands):

Consideration transferred - Company's 51% Interest:

Series B Convertible Preferred Stock issued to Hover	$	30,523
OASIS Software contributed to JV at fair value		860
Capitalized development costs subsumed		5,150
Total Consideration for Company's 51%	$	36,533
Fair Value of NCI (i.e., Hover's 49% Interest)		20,411
Total Fair Value of Invested Capital	$	56,944

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The preferred stock issued to Hover is based on a preliminary third-party valuation of $30.5 million at the Transaction Date. The $5.2 million of capitalized development costs represents amounts previously accrued by the Company under the SAA that were absorbed into the purchase price allocation as part of Hover's project contributions. The NCI was measured at fair value of $20.4 million based on a preliminary third-party valuation.

(c)

Preliminary Purchase Price Allocation

The total fair value of invested capital of $56.9 million has been preliminarily allocated to identifiable assets and goodwill as follows. The Company has engaged a third-party valuation specialist to assist with the final purchase price allocation, which is expected to be completed within the measurement period (not to exceed one year from the acquisition date).

Identifiable Intangible Assets and Goodwill — Preliminary Purchase Price Allocation	*Fair Value (in thousands)*	*Estimated Useful Life (in years)*
Customer relationships	$ 26,190	24
Favorable contracts	10,930	15
OASIS software	860	15
Goodwill	18,964	Indefinite
Total Fair Value of Invested Capital	$ 56,944

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.

(d)

Preliminary Nature of Allocation and Measurement Period Adjustments

As of the date these financial statements were issued, the purchase price allocation described above is preliminary. The final allocation may differ materially from the preliminary amounts as the Company completes its detailed review, obtains updated third-party valuations, finalizes the evaluation of the deferred tax consequences of the transaction, and gathers additional information about facts and circumstances existing as of the acquisition date. Any adjustments to the preliminary purchase price allocation will be made retrospectively as measurement period adjustments in accordance with ASC 805-10-25-17.

(e)

Noncontrolling Interest (“NCI”)

The 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.

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(f)

Supplemental Pro Forma Information

The 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.


		Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024		2025		2024
Pro forma revenues	$	0	$	93	$	0	$	280
*Pro forma net income (loss)	$	(10,355)	$	(5,551)	$	(6,263)	$	(19,649)

*Presented on a consolidated company basis before allocation of losses to the noncontrolling interest of $(236) for the three month periods ended September 30, 2025 and 2024 and ($707) for the nine month periods ended September 30, 2025 and 2024 relating to the noncontrolling interest holder's share of JV losses.

IDENTIFIED INTANGIBLE ASSETS

(a)

Classification and Useful Lives

In connection with the preliminary purchase price allocation, the Company identified the following finite-lived intangible assets that are subject to amortization:

	Gross Carrying Amount (in thousands)		Annual Amortization (in thousands)		Estimated Useful Life (in years)
Customer relationships	$	26,190	$	1,091	24
Favorable contracts		10,930		729	15
OASIS Software		860		57	15
Total Amortizable Intangibles	$	37,980	$	1,877

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. There is no amortization expense recorded in the period ended September 30, 2025 as the transaction closed on the final day of the period.

Favorable Contracts ($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. There is no amortization expense recorded in the period ended September 30, 2025 as the transaction closed on the final day of the period.

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. There is no amortization expense recorded in the period ended September 30, 2025 as the transaction closed on the final day of the period.

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IMPAIRMENT CONSIDERATIONS

(a)

Finite-Lived Intangible Assets and Long-Lived Assets

Finite-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, no impairment indicators were identified as of September 30, 2025 with respect to the JV's finite-lived intangibles or long-lived assets.

(b)

Goodwill

Goodwill 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.

As the JV was formed and goodwill was recognized on September 30, 2025, the fair value of the JV reporting unit was, by definition, at least equal to its carrying amount as of the Transaction Date. Accordingly, no goodwill impairment existed at inception.

TERMINATION OF STRATEGIC ALLIANCE AGREEMENT AND PRE-EXISTING RELATIONSHIP

Upon 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.

At 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).

7. Prepaid Expenses and Other Current Assets

Prepaid and other current expenses generally consist of amounts paid to vendors for services that have not yet been performed. Other receivable consist of the following (in thousands):

	June 30,		December 31,
	September 30,		December 31,
	2025		2024
	(in thousands)
Prepaid expenses and other current assets	$	-	$	131
Total	$	-	$	131

7. ~~Capitalized~~ 18 ~~development cost and other long-term assets~~

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8. Capitalized cost and other long-term assets

Capitalized development costs are amounts paid to vendors that are related to the purchase and construction of microgrid and 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:

	June 30,		December 31,
	September 30,		December 31,
	2025		2024
	(in thousands)
Capitalized development cost	$	~~3,162~~-	$	4,775
Long-term prepaid expenses		518		518
Total	$	~~3,680~~518	$	5,293

Capitalized ~~development~~ costs relate to various projects that are ~~under~~at the ~~development~~pre-acquisition ~~for~~phase and capitalizable in the ~~period~~industry by analogy to ASC 970-360-25-2 and 25-3, that the Company expects to start to receive meaningful revenues from as they are commissioned. As the Company ~~closes~~completes either a purchase or development of new solar parks or microgrids, these ~~development~~ costs are added to the final asset displayed in Property and Equipment. If the Company does not close on the prospective project, these costs are written off to Development Cost on the Consolidated Statement Operations and Comprehensive Loss.

12Capitalized cost as of September 30, 2025 were zero. 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”), see footnote 6. As part of the transaction, $5.15 million of capitalized costs, consisting of various microgrid projects in the UK and US, previously capitalized under the SAA formed part of the consideration for the transaction. . As of December 31, 2024 consisted of $1.2 million of microgrid development in the US and $3.6 million relating to the Italian projects.

Capitalized development cost as of June 30, 2025 consisted of $3.2 million relating to the development of microgrid projects with Hover Energy in the UK and US that the Company expects to start to receive meaningful revenues from as they are commissioned. As of December 31, 2024 consisted of $1.2 million of microgrid development in the US and $3.6 million relating to the Italian projects.

Long-term Prepaid Expenses consist of estimated income tax payments made by Clean Earth prior to the business combination in December 2023 that will used to offset any taxes payable in the future.

89. Accounts Payable

Accounts payable represents the amounts owed to suppliers of goods and services the Company has consumed through operations. Accounts payable consist of the following:

	June 30,		December 31,
	September 30,		December 31,
	2025		2024
	(in thousands)
Accounts payable	$	68,~~626~~445	$	9,799
Total	$	68,~~626~~445	$	9,799

910. Accrued Liabilities

Accrued expenses relate to various accruals for the Company. Accrued interest represents the interest on the Company’s debt that has accrued and has been unpaid through September ~~June~~ 30, 2025 and as of December 31, 2024. Accrued liabilities consist of the following (in thousands):

	June 30, 2025		December 31, 2024
	September 30,		December 31,
	2025		2024
	(in thousands)
Accrued legal	$	500	$	500
Accrued interest		~~1,035~~889		553
Accrued audit fees		-450		500
Accrued payroll		~~525~~691		22
Accrued consulting fees		~~140~~142		140
Accrued tax penalties		590		590
Other accrued expenses		-		66
Total	$	23,~~790~~262	$	2,371

1011. Taxes Recoverable and Payable

Taxes 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:

	June 30,		December 31,
	September 30,		December 31,
	2025		2024
	(in thousands)
Taxes recoverable	$	69	$	347
Less: Taxes payable		-		(14	)
Total	$	69	$	333

13 19

~~11.~~ ~~Convertible~~ Table ~~and~~of ~~Non-convertible~~Contents ~~Promissory Notes~~

~~The~~12. ~~following~~Convertible ~~table reflects the total debt balances of the Company as June 30, 2025~~ and ~~December 31,~~Non-convertible ~~2024:~~Promissory Notes

	As of June 30,			As of December 31,
	2025			2024
	(in thousands)
Convertible debt, secured	$	2,773		$	2,626
Other debt		7,934			27,718
Total debt		10,707			30,344
Less current maturities		(10,707	)		(28,715	)
Long term debt, net of current maturities	$	-		$	1,629
Current Maturities	$	10,707		$	28,715
Debt discount		343			(1,239	)
Less net loss on issuance of convertible note & warrant		-			520
Movement in fair value		(732	)		(632	)
Current Maturities net of debt discount	$	10,318		$	27,364
Long-term maturities	$	-		$	1,629
Less long-term debt discount		-			-
Long-term maturities net of debt discount	$	-		$	1,629

Convertible notes measured at fair value

The ~~Company’s~~following ~~remaining debt~~table isreflects recorded net of debt issuance costs of $0.3 million and $1.2 million as of June 30, 2025 and December 31, 2024, respectively. Debt issuance costs are recorded as a debt discount and amortized to interest expense over the ~~life~~Company's ofconvertible ~~the~~notes ~~debt,~~measured ~~upon~~at ~~the~~fair ~~close~~value ofunder the ~~related~~ ~~debt~~ASC ~~transaction,~~825 infair ~~the~~value ~~Consolidated~~option ~~Balance~~("FVO") ~~Sheet.~~election ~~Interest~~as ~~expense stemming from amortization~~ of September ~~debt discounts for continuing operations for the six months ended June~~ 30, 2025 and December ~~2024 was $1.8 million and $1.3 million~~31, ~~respectively.~~2024:

There was no interest expense stemming from amortization of debt discounts for discontinued operations for the six month periods ended June 30, 2025 and 2024, respectively.

	*Convertible*	*Convertible*	*Convertible*	*OID*
	*Notes*	*Notes*	*Notes*	*Convertible*
	*April 2024*	*October 2024*	*Total*	*Notes*	*Total*
	(in thousands)
Balance at December 31, 2024	$ 356	1,346	$ 1,702	-	$ 1,702
Conversions in period	-	(2,058)	(2,058)	-	(2,058)
Movement in fair value	(29)	835	806	-	806
Balance at March 31, 2025	327	123	450	-	450
Conversions in period			(52)	-	$ (52)
Reclass of accrued interest to convertible note			316	-	316
Movement in fair value			887	-	887
Balance at June 30, 2025			1,601	-	1,601
Notes reclassified upon reevaluation of embedded features			-	$ 1,975	$ 1,975
Loss from extinguishment on July 1, 2025			-	3,404	3,404
New convertible notes issued at fair value			-	519	519
Conversions in period			(62)	-	(62)
Movement in fair value			8	1,368	1,376
Balance at September 30, 2025			$ 1,547	$ 7,265	$ 8,813

April and October 2024 Convertible Promissory Notes:

In 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, as of September 30, 2025, 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

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As 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.

On April 28, 2025, the Company entered into a Letter Agreement with the Investor, which modifies certain terms and conditions of the Senior Convertible Note issued April 19, 2024 and the Senior Convertible Note issued October 1, 2024, by the Company to the Investor, collectively (the “2024 Notes”). The interest rate on the 2024 Notes is and will continue at a rate of 12% per annum. The conversion price of the 2024 Notes which remain outstanding shall be adjusted to the lesser of i) $6.00 and ii) 55% of the Market Price. Market Price shall mean the average of the three lowest traded prices of at least 100 shares during the twenty (20) Trading Days immediately prior to the Conversion Date. Unless mutually agreed upon, the Conversion Price shall not be less than $0.02. 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 nine months ended September 30, 2025. The Company has principal outstanding on the note of $0.4million as at September 30, 2025.

On 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 as of September 30, 2025, 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.

The 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).

On 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 September 30, 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.

On 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 September 30, 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.

On 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 September 30, 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.

As 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.

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During the Three Months Ended September 30, 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 the 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.

During the nine months ended September 30, 2025, given that the notes have materially the same terms and duration, the Company combined their presentation in the financial statements. During the nine months ended September 30, 2025, an aggregate of $2.1 million of the notes (including principal plus accrued interest and late fees and penalties) had been converted into 106,375 shares of common stock, leaving a principal outstanding amount of $0.6 million as of September 30, 2025. The Company recorded a $1.7 million loss on fair value movement for the nine months ended September 30, 2025..

OID Convertible Notes

On 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).

On 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.

The 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.

In 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 September 30, 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 September 30, 2025. The Maturity Dates of the September 2025 Notes have been subsequently extended on a monthly basis to March 2026.

OID Convertible Notes Modification, Extinguishment and Fair Value Election

In 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 three months ended September 30, 2025.

Original Terms

The 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.

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Modification and Extension Feature

During 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.

The 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.

Embedded Derivative Evaluation

In 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.

Fair Value Option Election

Because 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.

As 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.

Extinguishment Accounting

The 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.

The Company recognized a loss on extinguishment of $3.4 million during the three and nine months ended September 30, 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).

Subsequent Fair Value Changes

Following 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.

For the period from July 1, 2025 through September 30, 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.

Valuation Methodology

The 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.

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Valuation Inputs and Assumptions

The 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.

Significant unobservable inputs include:

●

Expected timing of repayment or extension elections

●

Discount rate, inclusive of market participant assumptions regarding credit risk

Sensitivity Analysis

Because 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.

●

Discount 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.

●

Expected 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.

The 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.

Credit Risk Attribution

The Company determined that no material portion of the change in fair value during the three months ended September 30, 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.

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Convertible and non-convertible promissory notes, net of debt issuance costs

The following table reflects the Company's convertible and non-convertible promissory notes, net of related discounts as of September 30, 2025 and December 31, 2024:

	*As of*			*As of*
	*September 30,*			*December 31,*
	*2025*			*2024*
	(in thousands)

Term loans		7,958			27,719

Gross convertible and non-convertible notes		7,958			27,719

Debt discount	$	(50	)	$	(1,239	)

Total convertible and non-convertible notes, net		7,908			26,480

Current Maturities net of debt discount	$	(7,908	)	$	(24,851	)

Long-term maturities net of debt discount	$	-		$	1,629

The Company’s remaining debt is recorded net of debt issuance costs of $0.0 million as of September 30, 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 three and nine months ended September 30, 2025 was $0.1million and $2.0million, respectively. Interest expense from amortization of debt discounts for the three and nine months ended September 30, 2024 was $0.4 and $2.0 million, respectively.

There was no interest expense stemming from amortization of debt discounts for discontinued operations for the nine months ended September 30, 2025 and for the year ended 2024, respectively.

Senior secured debt:

In 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.

In 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.

14 25

In ~~October 2023, Alternus~~ ~~Energy~~ Table ~~Americas, one~~ of ~~the~~Contents ~~Company’s 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. The Company had a principal balance outstanding of $1.8 million and $1.8 million as of June 30, 2025 and December 31, 2024, respectively.

~~Convertible~~In October ~~Promissory~~2023, ~~Notes:~~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. The Company had a principal balance outstanding of $1.8 million and $1.8 million as of September 30, 2025 and December 31, 2024, respectively.

InOn March ~~January~~21, 2024, ALCE, SPAC Sponsor Capital Access (“SCAF”), and the ~~Company assumed~~Sponsor aof ~~€0.85~~Clean ~~million~~Earth (“CLIN”) agreed to a settlement of a $01.944 million) ~~convertible~~note ~~promissory~~assumed ~~note~~by ~~from~~ALCE ~~AEG~~as ~~PLC,~~part aof ~~related~~the ~~party~~Business Combination that was completed in December 2023. The note had a ~~10%~~maturity ~~interest~~date ~~maturing in~~of ~~March~~whenever ~~2025~~CLIN closes its Business Combination Agreement and accrued interest of 25%. ~~The~~ALCE ~~note~~issued ~~was~~45 ~~assumed~~shares asto ~~part~~SCAF in March 21, 2024 and a payment plan of the ~~Business~~rest ~~Combination~~of ~~that~~the outstanding balance was ~~completed~~agreed into ~~December~~with ~~2023.~~payments Onto ~~January~~commence 3on July 15, 2024,. ~~the~~The ~~noteholder converted~~closing ~~all~~stock price of the ~~principal~~Company ~~and~~was ~~accrued~~$2,350 ~~interest~~on ~~owed~~the date of issuance. On July 10, 2025 SCAF was granted a motion of summary judgment for $1.6 million due under ~~the~~a ~~note~~settlement agreement, ~~equal~~plus accrued interest to date and attorney’s fees. The Company has recorded $1.0 9 million in principal, ~~into~~accrued ~~264~~interest ~~shares~~and offees ~~restricted~~on ~~common~~this ~~stock~~note as at September 30, 2025.

InOn December ~~April~~11, 2024, ~~the~~BESS ~~Company issued to an institutional investor a senior convertible note in the principal amount of $2~~LLC,~~160,000,~~ ~~issued with an 8.0% original issue discount, and~~ a ~~warrant~~wholly toowned ~~purchase~~subsidiary ~~up to 482 shares~~ of the Company~~’s common stock at an exercise price of $2~~,~~400~~ ~~per~~issued ~~share. This warrant was adjusted on November 12, 2024 and December 5, 2024, and as~~ a ~~result,~~non-interest-bearing aspromissory ofnote June 30, 2025, the warrant has been adjusted to purchase up to 5,778 shares of the Company’s common stock at an exercise price of $200 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~~principal ~~placement agency~~amount ~~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~~partial ~~below)~~consideration ~~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~~Asset ~~Note)~~Purchase ~~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~~for ~~defined below) in an amount equal~~ the ~~sum~~acquisition of ~~(A)~~LiiON ~~the~~LLC’s ~~lesser~~battery ofstorage (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 stockbusiness. The ~~portion~~note ofwas ~~the~~issued ~~Installment Amount paid~~ with ~~common~~a ~~stock~~maturity 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 December ~~the applicable Installment Date or Interest Date and the date on which the applicable shares of Common Stock are actually delivered to the Holder~~31, ~~the Equity Conditions have not been satisfied (or waived in writing by the Holder)~~2027. ~~The~~Pursuant ~~Convertible~~to ~~Note is convertible, at~~ the ~~option~~requirements of ~~the~~ ~~Investor,~~ASC ~~at any time~~805, ~~into such number of shares of Common Stock of~~ the ~~Company equal to the principal amount of the Convertible~~ Note ~~plus~~was ~~all~~originally ~~accrued~~recorded ~~and unpaid interest~~ at aits ~~conversion~~fair ~~price,~~value ~~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 protection1, ~~subject to a floor conversion price~~537,000 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,~~see ~~upon~~Footnote ~~election of the Investor, 9.99%~~5) 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~~included ~~and Common Stock issued thereunder) is limited to 19.99% of the outstanding Common Stock~~ as ofpartial ~~April~~consideration ~~19,~~for ~~2024 (~~the ~~“Exchange~~net ~~Cap”)~~assets ~~unless~~acquired ~~shareholder approval (as defined~~ in the ~~Purchase Agreement) (“Stockholder Approval”) is obtained by the Company to issue more than the Exchange Cap~~acquisition. On May ~~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.~~2025 ~~This~~this ~~ASU~~Note 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~~cancelled ~~million~~in ~~with~~full ~~fair~~as ~~value~~part of ~~$0.7 million at that date. The Company also recorded a $1.3 million gain on movement in fair value in~~ the ~~year~~LiiON ~~ended~~Rescission ~~December~~(See ~~31,~~Footnote ~~2024 and a $0~~5).~~6 million loss on movement in fair value for the six months ended June 30, 2025.~~

15On 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 totaling $1,052,50 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.

As 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.

On April 28, 2025, the Company entered into a Letter Agreement with the Investor, which modifies certain terms and conditions of the Senior Convertible Note issued April 19, 2024 and the Senior Convertible Note issued October 1, 2024, by the Company to the Investor, collectively (the “2024 Notes”). The interest rate on the 2024 Notes is and will continue at a rate of 12% per annum. The conversion price of the 2024 Notes which remain outstanding shall be adjusted to the lesser of i) $6.00 and ii) 55% of the Market Price. Market Price shall mean the average of the three lowest traded prices of at least 100 shares during the twenty (20) Trading Days immediately prior to the Conversion Date. Unless mutually agreed upon, the Conversion Price shall not be less than $0.02. The maturity date of the 2024 Notes shall be extended to December 31, 2025. Pursuant to the Letter Agreement, the Company agreed to issue the Investor a warrant (the “Warrant”) to purchase up to 170,000 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), at an exercise price of $6.00 per share (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 in the six months ended June 30, 2025. The Company has principal outstanding on the note of $0.4 million as at June 30, 2025.

On 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 and on December 5, 2024, such that as of June 30, 2025, the warrant was adjusted to purchase up to 2,128 shares exercisable at $200 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.

The Convertible Note matures on October 1, 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).

On October 21, 2024, pursuant to the Purchase Agreement, the closing of the second tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 813 shares of Common Stock exercisable at $400 per share and the Company received gross proceeds of $535,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount. This warrant was adjusted on November 12, 2024 and on December 5, 2024, such that as of June 30, 2025, the warrant was adjusted to purchase up to 1,626 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.

On November 12, 2024, pursuant to the Purchase Agreement, the closing of the third tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 1,520 shares of Common Stock exercisable at $300 per share and the Company received gross proceeds of $750,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount. This warrant was adjusted on December 5, 2024 so that as of June 30, 2025, the warrant was adjusted to purchase up to 2,280 shares at an exercise price of $200 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.

On 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 June 30, 2025 was adjusted to purchase up to 654 shares of Common Stock exercisable at $200 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.

As 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.

During the three months ended March 31, 2025, $2.0 million principal of this note was converted into 14,684 shares, leaving $0.1 million of the note principal outstanding. The Company also recorded a $0.8 million loss on movement in fair value in the three months ended March 31, 2025.

During the three months ended June 30, 2025, given that the notes have materially the same terms and duration, the Company combined their presentation in the financial statements. During the three months ended June 30, 2025, $58,316 of the notes (including principal plus accrued interest and late fees and penalties) had been converted into 29,500 shares of common stock, leaving a principal outstanding amount of $0.7 million as of June 30, 2025. The Company also recorded a $0.8 million loss on fair value movement for the three and six months ended June 30, 2025.

On 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 and June 30, 2025. The terms of each of those agreements 1) increased the OID (increased to 45% as of June 30, 2025), and 2) extended the maturity date of the Note (matures on August 5, 2025 based on the June 30, 2025 amendment). Because the Company has been experiencing financial difficulties and because the terms of the amendments resulted in a lower effective borrowing rate than the original Note terms, the Company has recognized the modifications as a troubled debt restructuring (“TDR”). Due to the undiscounted cash flows on the modified debt exceeding the carrying value of the original debt as of the modification date, no gain or loss was recorded and the Note has been adjusted to reflect the new borrowing rate implied by the restructured cash flows from the date of the modification through the new maturity date. As of June 30, 2025, after updating the 2024 Note to reflect the newly implied borrowing rate, the adjusted carrying value of the debt was $1,689,894 (i.e., representing an updated face value of $1,818,182, less unamortized discount of $128,288). Refer to the Subsequent Events Footnote 22 for information regarding additional amendments to the terms of the 2024 Note that have occurred between June 30, 2025 and the issuance date of the financial statements for the period ended June 30, 2025.

On May 29, 2025, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”), dated as of May 29, 2025, with an institutional investor pursuant to which the Company issued a 20% Original Issue Discount promissory convertible note (the “2025 Note”) with a maturity date in August 2025, which was extended to November 5, 2025, in the principal sum of $312,500. Pursuant to the terms of the 2025 Note, the Company agreed to pay 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.

The 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.

Other Debt:

On 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. The Company has recorded $1.7 million in principal and accured interest on this note as at June 30, 2025.

On 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).

On December 30, 2024, one of the Company’s subsidiaries, Alternus Europe Ltd, assumed a €1,000,000 ($1,041,720) promissory note from subsidiary of AEG, Alternus Fund Co Ltd, with a 120% repayment premium plus 10% accrued interest maturing July 31, 2025. Additionally, on December 31, 2024 the Company assumed multiple promissory notes totaling $1,052,500 million from AEG maturing June 30, 2025 and in April of 2025 the Company assumed two additional promissory notes totaling $250,000 from AEG maturing on July 31, 2025. These notes have not been repaid as of the date of this filing and he parties are currently to extend them further.

On 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).

On 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 September ~~June~~ 30, 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 ~~applicable~~loss on debt issuance and has has accrued $64,042 in default interest. for the nine months ended September 30, 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.

On 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 September ~~at June~~ 30, 2025, being cash received of $415,000 and debt issuance costs capitalized of $83,000. The debt issuance costs are amortized over the life of the loan, of which $1750,~~844~~422 are expensed in the income statement for the period ended September ~~June~~ 30, 2025.

On 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 ~~June~~ September 30, 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 $422,~~615~~ 308 are expensed in the income statement for the period ended September ~~June~~ 30, 2025.

19On 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 September 30, 2025, being cash received of $120,000 and debt issuance costs capitalized of $24,000. 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 September 30, 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.

~~12.~~ ~~Other~~ 26 ~~Payables~~

~~This~~ ~~represents $5.2~~ ~~million~~ Table ~~due to Sunrise Development LLC a former supplier~~ of ~~project~~Contents ~~devlopement to certain subsidiaries then owned by the Company. Given~~ ~~the arbitration award granted to Sunrise, the Company has reclassed this payable from trade payables to other payables. (See Footnote 13).~~

13. ~~Commitments~~Other ~~and Contingencies~~Payables

This represents $5.2 million due to Sunrise Development LLC a former supplier of project developement to certain subsidiaries then owned by the Company. Given the arbitration award granted to Sunrise, the Company has reclassed this payable from trade payables to other payables. (See Footnote 14).

14. Commitments and Contingencies

Litigation

The 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.

On October 15, 2024 Sunrise Development LLC (“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 a related party, Alternus Energy Group PLC (“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 is currently assessing its options. The Company has accrued a liability for this loss contingency in the amount of approximately $5.2 million in other payables in the financial statements, which represents the amount allegedly owed less the value provided to Sunrise by way of share issuance to reduce the amount due.

On 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 $1.7 million, at September ~~June~~ 30, 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. Subsequently, 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 parties are currently in further settlement discussions.

On May 8, 2025, the Company, Alternus Energy Group PLC (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. 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.

Commitments

On October 14, 2024, the Company entered into a settlement agreement and release with Morgan Franklin Consulting LLC (“MF”) related to the settlement of payments owed to MF for services rendered in the total amount of $276,796 through twelve equal monthly installments commencing in October of 2024. As of December 31, 2024 and the date of this Report, the Company had not made any of these payments but has agreed to repay this amount by March 31, 2026, and MF has agreed not to pursue payment until March 31, 2026 at which time MF expects to use all actions available to recover the amount due.

CFGI LP and the Company entered into a settlement agreement for a contractual amount owed for services rendered in the amount of $358,000, whereby the Company shall pay to CFGI approximately $10,000 per month commencing June 2, 2025 for a period of three years. As of the date of this Report, the Company has failed to make all of the payments.

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On 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.

In connection with the Agreement, on 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 September ~~June~~ 30, 2025, which represents the value of the 20,000 shares issued as the settlement fee.

The 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 September ~~June~~ 30, 2025 was $4,242,963 and has been recorded as within Accounts Payable in the Company’s consolidated balance sheet.

Contingencies

OnGuarantee ~~August 7, 2024, the Company entered into a ‘Heads~~ of ~~Terms’~~MH02 (i.e., similar to a Letter of Intent) for Joint “Agreement”) with Hover Energy LLC and its affiliates (“Hover”) to establish a joint venture (the “JV”) for the financing, development, management, and operation of ‘Microgrid Projects’ utilizing Hover Wind-Powered Microgrid™ technology, as required. Pursuant to the said JV, the Company and Hover have agreed to have a 51% interest and a 49% interest, respectively, in the JV, for which the Company has issued 1,000 shares of restricted common stock to Hover valued at $2,000 per share and will issue and commit 700 additional shares of restricted common stock, and Hover will contribute certain initial projects and project pipeline. As of June 30, 2025 the JV had not yet closed and the parties continue to operate under a strategic alliance agreement entered into on October 31, 2023. The Company has not consolidated Hover as of June 30, 2025 because the strategic alliance agreement does not render the Company a controlling financial interest in Hover. Upon the closing of the JV, the Company will perform an analysis to determine if it has acquired a controlling financial interest in the JV requiring consolidation pursuant to the requirements of ASC 810.Note

OnIn ~~October~~connection ~~31,~~with ~~2024~~the Company’s prior ownership of AEG MH02 Ltd. (“MH02”), the Company ~~and~~ ~~Hover~~guaranteed ~~entered~~a ~~into~~third-party loan (the “Note”) with an ~~amendment~~outstanding toprincipal ~~their~~balance ~~strategic~~of ~~alliance~~€15.4 ~~agreement~~million ($17.4 million) as of as of May 7, ~~whereby~~2025. On May 7, 2025, the Company ~~will~~completed ~~provide~~the upsale of MH02 to the lender and an additional $1third party (the “Buyers”). As part of the sale transaction,~~800~~ the lender agreed to a standstill arrangement (the “Standstill”),~~000 in~~ ~~development~~pursuant ~~fees~~to which it will forbear from exercising its rights to ~~Hover~~repayment, asincluding ~~and~~any ~~when~~remedies ~~development~~upon ~~services~~default, ~~are~~until ~~performed~~such time as all solar photovoltaic projects owned by ~~Hover~~MH02 ~~for~~and ~~specific~~its ~~Microgrid~~subsidiaries (the “Projects”) have reached ready-to-build (“RTB”) status and have subsequently been sold. AsUnder the terms of ~~June~~the 30sale agreement, ~~2025~~as each Project achieves RTB status, ~~services~~ ~~had~~the ~~been~~Company ~~performed~~(or byone ~~Hover~~of ~~for~~its ~~specific~~affiliates) ~~Microgrid~~has ~~Projects~~the ~~agreed~~option, ~~upon~~but bynot the ~~Company~~obligation, ~~and~~to $1purchase such Project at its market value,~~750~~ subject to a minimum price of €150,000 (approximately $175,000 USD as of September 30, 2025) per megawatt. This option is ~~due~~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 ~~Hover~~a third party.

~~14.~~ ~~Development~~ 28 ~~Cost~~

~~Initial~~ ~~costs incurred in~~ ~~project~~ Table ~~development are capitalized and held on the balance sheet. The Company regularly reviews the status~~ of ~~these~~Contents ~~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 at June 30, 2025 and the Company accounted for $7,000 in development costs for the three and six months in 2024.

The 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 September 30, 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.

15. Development Cost

Initial 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 September 30, 2025 and the Company accounted for $748,000 in development costs for the nine months ended September 30, 2024.

Miscellaneous 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.

1516. Discontinued Operations Sold – Poland & Netherlands

In 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.

The 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.

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The 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.

	Three Months Ended		~~Six~~Nine Months Ended
Poland	~~June~~September 30, 2024
	(in thousands)
Revenues	$	-	$	106
Operating Expenses
Cost of revenues		-		(101	)
Depreciation, amortization, and accretion		-		(123	)
Gain on disposal of asset		-		3,484
Total operating expenses		-		3,260
Income/(loss) from discontinued operations		-		3,366
Other income/(expense):
Interest expense		-		(688	)
Other expense		-		-
Total other expenses	$	-	$	(688	)
Income/(Loss) before provision for income taxes	$	-	$	2,678
Net income/(loss) from discontinued operations	$	-	$	2,678
Impact of discontinued operations on EPS
Net income/(loss) attributable to common stockholders, basic and diluted	$	-	$	2,678
Net income/(loss) per share attributable to common stockholders, basic and diluted	$	-	$	~~200~~161.0076
Weighted-average common stock outstanding, basic		-		1316,~~228~~555
Weighted-average common stock outstanding, diluted		-		1316,~~228~~555

	Three Months Ended		~~Six~~Nine Months Ended
Netherlands	~~June~~September 30, 2024
	(in thousands)
Revenues	$	-	$	16
Operating Expenses
Cost of revenues		-		(115	)
Depreciation, amortization, and accretion		-		(57	)
Loss on disposal of asset		-		(1,~~334~~222	)
Total operating expenses		-		(1,~~506~~394	)
Income/(loss) from discontinued operations		-		(1,~~490~~378	)
Other income/(expense):
Interest expense		-		(113	)
Other expense		-		-
Total other expenses	$	-	$	(113	)
Loss before provision for income taxes	$	-	$	(1,~~603~~491	)
Net loss from discontinued operations	$	-	$	(1,~~603~~491	)
Impact of discontinued operations on EPS
Net loss attributable to common stockholders, basic and diluted	$	-	$	(1,~~603~~491	)
Net loss per share attributable to common stockholders, basic and diluted	$	-	$	(~~120~~90.0006	)
Weighted-average common stock outstanding, basic		-		1316,~~228~~555
Weighted-average common stock outstanding, diluted		-		1316,~~228~~555

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On 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 year ended December 31, 2024.

The 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.

	Six Months Ended June 30,
	Three Months Ended
Solis and Subsidiaries in Romania	September 30, 2024
	(in thousands)
Revenues	$	53,~~856~~649
Operating Expenses
Cost of revenues		(21,~~304~~374	)
Selling, general, and administrative		(~~1,126~~77	)
Depreciation, amortization, and accretion		(~~991~~504	)
Total operating expenses		(4,421	)
Costs of disposal of assets		(635	)
Income from discontinued operations		130
Total operating expenses		(2,590	)
Income from discontinued operations		1,059
Other income/(expense):
Loss on sale of assets		(2,511	)
Interest expense	(3,428		)
Income/(Loss) before provision for income taxes	$	(946	)
Other expense	-
Net income/(loss) from discontinued operations	$	(946	)
Total other expenses	$(3,428		)
Loss before provision for income taxes	$	(2,369	)
Net loss from discontinued operations	$	(2,369	)

1617. Sale of Spanish Subsidiaries

On 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.

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The major classes of assets and liabilities transferred on March 25, 2025 in the sale of the Company’s subsidiaries are shown below:

	*As of*
	*March 25,*
Spain	*2025*
	(in thousands)

Assets:
Other current assets	$	36
Total assets sold	$	36

Liabilities:
Accounts payable	$	196
Short secured debt		2,773
Operating leases, current liabilities		29
Other current liabilities		203
Operating leases, non-current liabilities		423
Total liabilities sold	$	3,624

Net (gain)/loss on sale of net assets	$	(3,588	)

1718. Sale of Assets Held for Sale: MH 02 & its Subsidiaries

During 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 ~~with~~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 ($17.6 4 million) against the Company’s ~~parent~~ 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.

As part of the Transaction the Minority Buyer agreed to forbear its claim aganst 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.

As a result of the Transaction, the Company ~~recored~~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.

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As 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.

The major classes of assets and liabilities transferred on May 7, 2025 in the sale of MH02 and its subsidiaries are shown below:

	*As of*
	*May 7,*
MH 02 and Italian Subsidiaries	*2025*
	(in thousands)

Assets:
Cash and cash equivalents	$	47
Other current assets		388
Capitalized development costs		3,877
Total assets	$	4,312

Liabilities:
Accounts payable & accrued liabilities	$	694
Short term convertible & non-convertible notes		17,606
Other current liabilities		16
Total liabilities	$	18,316
Amounts due to AEG not acquired		1,567
Foreign currency translation reserve		472
Net (gain)/loss on sale of the subsidiaries	$	(11,965	)

1819. Shareholders’ Equity

Common Stock

As of December 31, 2024, the Company had a total of 300,000,000 shares of common stock authorized with 25,189 shares issued and outstanding. As of September ~~June~~ 30, 2025, the Company had a total of 600,000,000 shares of common stock authorized with ~~598~~690,~~591~~ 283 shares issued and outstanding.

Reverse Stock ~~Split~~Splits

On October 11, 2024, the Company effected a one-for-25twenty five (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 on October 11, 2024 at 12:01 a.m. Eastern Time. The 2024 Reverse Stock Split temporarily brought the Company into compliance with the $1.00 minimum bid price requirement for continued listing on the NASDAQ Capital Market, as required by Nasdaq Listing Rule 5550(a)(2).

As 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 non-assessable share of Common Stock. The 2024 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 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 2024 Reverse Stock Split, in each case, in accordance with the terms thereof.

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On 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.

As 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.

All 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.

Common Stock Issuances

On January 2, 2025, a convertible note holder converted $1,588,693 of the October Convertible Note into 2,118,262 shares of unrestricted common stock valued at $0.75 per share.

On January 8, 2025, a convertible note holder converted $202,500 of the October Convertible Note into 270,000 shares of unrestricted common stock valued at $0.75 per share.

On January 23, 2025, the Company issued 1,526,058 shares of restricted common stock valued at $563,268 to certain investors of the promissory notes issued on January 23, 2025.

On February 6, 2025, a convertible note holder converted $85,113 of the October Convertible Note into 113,485 shares of unrestricted common stock valued at $0.75 per share.

On February 11, 2025, a convertible note holder converted $150,000 of the October Convertible Note into 200,000 shares of unrestricted common stock valued at $0.075 per share

On 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.

On 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.

On May 2, 2025, the Company issued 20,000 shares of common stock to SPC as a settlement fee, valued at $172,000.

On 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.

On 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.

27On 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.

On 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.

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Preferred Stock

As of September ~~June~~ 30, 2025 and December 31, 2024, the Company 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. There were 60,000 shares of Series A Super Voting Preferred Stock (the “Series A”) and 21,150 shares of Series B Convertible Preferred Stock (the "Series B") issued and outstanding as of September ~~June~~ 30, 2025.

The board of directors of the Company has the authority to establish one or more series of preferred stock, fix the voting rights, if any, designations, powers, preferences and any other rights, if any, of each such series and any qualifications, limitations and restrictions thereof.

Series A Super Voting Preferred Stock

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. 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.

Series A Super Voting Preferred Stock Issuance

On March 21, 2025 the Company issued 10,000 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.

On 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.

Series B Convertible Preferred Stock

Each 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.

Conversion 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.

Adjustments 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.

Restriction 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.

Restriction 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.

Voting 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.)

Series B Issuances

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).

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Warrants

As of September ~~June~~ 30, 2024, warrants to purchase up to 81,~~313~~ 363,290 shares of common stock were issued and outstanding. These warrants were related to financing activities. During the ~~six~~nine months ended September ~~June~~ 30, 2024, the Company issued 51,~~844~~ 360,821 additional warrants; during the ~~six~~nine months ended September ~~June~~ 30, 2025, the Company issued 382 additional warrants exercisable at $81.18 per share with a five-year term to Maxim as compensation for placement agent services related to the January 21, 2025 financing, and the Company issued, ~~170~~as adjusted for contractual terms related to stock splits,~~000~~ 1,199,295 warrants exercisable at $60.00 85 per share with a 5.5 year term to 3i as part of a financing activity. As of September ~~June~~ 30, 2025, warrants to purchase up to ~~185~~4,~~717~~ 135,910 shares of common stock were issued and outstanding.

	Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
					Weighted
Outstanding - January 1, 2024		2,469	$	56,100		4.93
					Average
Issued during the period		5,844		216		1.82
			Weighted		Remaining
			Average		Contractual
			Exercise		Term
	Warrants		Price		(Years)
Outstanding – January 1, 2024		2,469	$	56,103.87		4.98
Issued during the period		1,360,821		0.95		5.50
Expired during the period		-		-		-
Outstanding – June 30, 2024		8,313		9,214		4.58
Outstanding – September 30, 2024		1,363,290	$	102.56		5.05
Exercisable – June 30, 2024		8,313	$	9,214		4.58
Exercisable – September 30, 2024		1,363,290	$	102.56		5.05

					*Weighted*
					*Average*
			*Weighted*		*Remaining*
			*Average*		*Contractual*
			*Exercise*		*Term*
	*Warrants*		*Price*		*(Years)*
Outstanding – January 1, 2025		2,936,234	$	48.12		5.08
Issued during the period		1,199,677		0.88		5.51
Expired during the period		-		-		-
Outstanding – September 30, 2025		4,135,910	$	34.42		4.55
Exercisable – September 30, 2025		4,135,910	$	34.42		4.55

	Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding – January 1, 2025		15,335	$	9,214		4.58
Issued during the period		170,382				2.18
Expired during the period		-		-		-
Outstanding – June 30, 2025		185,717		766.49		6.76
Exercisable – June 30, 2025		185,717	$	766.49		6.76

2023 Equity Incentive Plan

As of December 31, 2024 and September ~~June~~ 30, 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 September ~~June~~ 30, ~~2025~~ 2025 no shares were issued or outstanding under the 2023 Equity Incentive Plan.

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 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.

1920. Segment and Geographic Information

Effective 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.

The Company has two reportable segments that consist of PV operations by geographical region, United States Operations and European Operations. The Chief Operating Decision-Maker (CODM) is the CEO.

Historically, the European Segment had derived revenues from three sources, Country Renewable Programs, Green Certificates and Long-term Offtake Agreements. The United States Segment revenues are expected to be 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 were sold. Additionally, the Company had no revenue from continuing operations as the Lightwave operating parks were sold to a related party, Alternus Energy Group Plc, as a result of the deconsolidation of Alternus Energy Americas Inc. on November 5, 2024.

In evaluating financial performance, the CODM uses ~~both~~Adjusted ~~gross profit and~~ EBITDA to assess segment performance and decide how to allocate resources. ~~However,~~Adjusted ~~after~~EBITDA ~~the~~is ~~sale of~~defined ~~Solis~~as ~~and~~earnings ~~its~~before ~~Romanian~~interest ~~subsidiaries~~expense, ~~and~~income ~~the~~tax ~~deconsolidation~~expense, ofdepreciation ~~Alternus Energy Americas~~ and ~~its~~amortization, ~~United States subsidiaries~~ and ~~AEG MH~~any 01one ~~and~~time ~~its Irish subsidiaries, the CODM now uses EBITDA, a~~ non-~~GAAP~~operational ~~measure,~~costs asor ~~the~~costs ~~main~~related ~~measure~~to offinancing ~~a segment’s performance because no revenues~~ or ~~gross profit remains after disposal of these entities~~capital transactions. ~~EBITDA is defined as earnings before interest expense, income tax expense, depreciation and amortization.~~ The Company uses Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations. ~~EBITDA~~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.

29 36

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The following tables present information related to the Company’s reportable segments. The data has been presented to show the effect of discontinued operations for subsidiaries sold or deconsolidated.

	Three Months Ended June 30				Six Months Ended June 30
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Revenue by Segment	2025		2024		2025		2024
	(in thousands)				(in thousands)
Europe	$	-	$	-	$	-	$	-
Europe – Discontinued Operations		-		3,~~754~~649		-		59,~~963~~611
United States		-		93		-		~~187~~280
Total for the period	$	-	$	3,~~847~~742	$	-	$	69,~~150~~891

	Three Months Ended June 30						Six Months Ended June 30
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Net Income/(loss) by Segment	2025			2024			2025			2024
	(in thousands)						(in thousands)
Europe	$	~~11,553~~(335	)	$	(1,~~393~~500	)	$	14,~~361~~026		$	(24,~~735~~376	)
Europe – discontinued activities		-			(1624	)		-			(3,189	)
Europe – Discontinued Operations		-			(2,370	)		-			(5,419	)
United States		(69,~~319~~414	)		(1,~~625~~200	)		(918,~~307~~720	)		(78,~~492~~691	)
Total for the period	$	5(9,~~234~~749	)	$	(65,~~837~~070	)	$	5(4,~~054~~694	)	$	(1318,~~416~~486	)

Assets by Segment	As of June 30, 2025		Year Ended December 31, 2024
	As of		Year Ended
	September 30,		December 31,
Assets by Segment	2025		2024
	(in thousands)
Europe – Continuing Operations
Other Assets	$	-26,199	$	3,959
Total for Europe – Continuing Operations	$	-26,199	$	3,959
United States – Continuing Operations
Other Assets	$	331,~~678~~311	$	3,768
Total for United States – Continuing Operations	$	331,~~678~~311	$	3,768

Liabilities by Segment	As of June 30, 2025		Year Ended December 31, 2024
	As of		Year Ended
	September 30,		December 31,
Liabilities by Segment	2025		2024
	(in thousands)
Europe – Continuing Operations
Debt	$	1,~~172~~173	$	19,807
Other Liabilities		~~747~~867		1,200
Total for Europe – Continuing Operations	$	12,~~919~~040	$	21,007
United States – Continuing Operations
Debt	$	1012,~~127~~830	$	9,598
Other Liabilities		1320,~~896~~015		11,007
Total for United States – Continuing Operations	$	2432,~~023~~845	$	20,605

30 37

	Three Months Ended June 30,						Six Months Ended June 30,
EBITDA by Segment	2025			2024			2025			2024
	(in thousands)						(in thousands)
Europe	$	(535	)	$	(300	)	$	(109	)	$	(505	)
Europe -Discontinued Operations		-			3,446			-			3,758
US		(3,188	)		(2,052	)		(5,069	)		(4,878	)
Total for the period	$	(3,723	)	$	(1,059	)	$	(5,178	)	$	(1,625	)

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Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented:

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
EBITDA by Segment	*2025*			*2024*			*2025*			*2024*
	(in thousands)						(in thousands)
Europe	$	(306	)	$	1,849		$	(1,044	)	$	(1,026	)
Europe - discontinued operations		-			(663	)		-			5,468
US		(677	)		(1,780	)		(5,119	)		(6,658	)
Total for the period	$	(983	)	$	(594	)	$	(6,162	)	$	(2,216	)

	Three Months Ended June 30,						Six Months Ended June 30,
EBITDA Reconciliation to Net Loss	2025			2024			2025			2024
	(in thousands)						(in thousands)
Europe
EBITDA	$	(198	)	$	(285	)	$	(624	)	$	(153	)
Depreciation, amortization, and accretion		-			(130	)		-			(201	)
Interest expense		(172	)		(1,189	)		(526	)		(2,200	)
Gain on sale of subsidiaries		11,924			-			15,513			-
Net Income /(Loss)	$	11,554		$	(1,604	)	$	14,363		$	(2,906	)
Europe – discontinued operations
EBITDA		-			618			-			3,758
Depreciation, amortization, and accretion		-			(314	)		-			(991	)
Interest expense		-			(1,718	)		-			(5,785	)
Net Income / (Loss)		-			(1,414	)		-			(3,018	)
US
EBITDA	$	(3,492	)	$	(2,052	)	$	(4,553	)	$	(4,878	)
Depreciation, amortization, and accretion		(23	)		(49	)		(130	)		(99	)
Interest expense		(1,065	)		(588	)		(2,914	)		(1,081	)
Income taxes		-			-			-			-
Fair value movement of FPA Asset		-			-			-			(483	)
Fair value movement of convertible debt		(882	)		(182	)		(887	)		(182	)
Fair value movement of warrant		162			-			162
Warrant issuance cost		(753	)		-			(753	)
Stock issued under debt settlement		(172	)					(172	)
Other expense		(94	)					(60	)
Loss on issuance of debt		-			(948	)		-			(948	)
Gain on extinguishment of debt		-			-			-			179
Net Loss	$	(6,319	)	$	(3,819	)	$	(9,307	)	$	(7,492	)
Consolidated Net Income / (Loss)	$	5,234		$	(6,837	)	$	5,054		$	(13,416	)

Below is a reconciliation of net income to Adjusted EBITDA for the periods presented:

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
EBITDA Reconciliation to Net Loss	*2025*			*2024*			*2025*			*2024*
	(in thousands)						(in thousands)
Europe
Adjusted EBITDA	$	(306	)	$	1,849		$	(932	)	$	(1,026	)
Depreciation, amortization, and accretion		-			(27	)		-			(27	)
Interest expense		(29	)		(3,322	)		(555	)		(3,323	)
Gain on sale of subsidiaries		-			-			15,513			-
Net Income /(Loss)	$	(335	)	$	(1,500	)	$	14,026		$	(4,376	)

Europe - discontinued operations
Adjusted EBITDA	$	-		$	(663	)	$	-		$	5,468
Gain/(loss) from operations of discontinued business component		-			156			-			(3,205	)
Gain/(loss) on sale of discontinued business components		-			(635	)		-			1,531
Interest expense		-			(1,228	)		-			(9,213	)
Net Income /(Loss)	$	-		$	(2,370	)	$	-		$	(5,419	)

US
Adjusted EBITDA	$	(677	)	$	(1,780	)	$	(5,592	)	$	(6,658	)
Depreciation, amortization, and accretion		-			(49	)		(130	)		(148	)
Interest expense		(371	)		(450	)		(3,285	)		(1,531	)
Fair value movement of FPA Asset		-			-			-			(483	)
Fair value movement of convertible notes		(1,377	)		1,079			(2,263	)		898
Debt restructuring costs		-			-			(753	)		-
Fair value movement of warrant derivative liability		(677	)		-			(514	)		-
Gain on settlement of payables		426			-			426			-
Loss on issuance of debt		(19	)		-			(19	)		-
Loss on extinguishment of debt		(3,404	)		-			(3,404	)		-
Loss on settlement of SAA with Hover		(2,025	)					(2,025	)
Loss on settlement of liabilities		(151)			-			(151)			(948)
Provision for loss from related party		(1,139	)		-			(1,139	)		179
Other expense		-			-			(232	)		-
Net Loss	$	(9,414	)	$	(1,200	)	$	(18,720	)	$	(8,691	)
Income Taxes		-			-			-			-
Consolidated Net Income / (Loss)	$	(9,749	)	$	(5,070	)	$	(4,694	)	$	(18,486	)

2021. Income Tax Provision

The Company’s provision for income taxes for interim periods is determined using its effective tax rate expected to be applied for the full year. The Company’s effective tax rate was 0.0% for the ~~three~~nine months ended September ~~March 31~~30, 2025, and 0.0%, respectively for the same period in the prior year, as it maintains a full valuation allowance against its net deferred tax assets.

The Company assesses the realizability of the deferred tax assets at each reporting date. The Company continues to maintain a full valuation allowance for its net deferred tax assets. If certain substantial changes in the entity’s ownership occur, there may be an annual limitation on the amount of the carryforwards that can be utilized. The Company will continue to assess the need for a valuation allowance on its deferred tax assets.

2122. Related Party

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

AEG:

Alternus Energy Group Plc (“AEG”) was a 71% shareholder as of September ~~June~~ 30, 2024, a 48% shareholder as of December 31, 2024 and a 1815% shareholder as of September ~~June~~ 30, 2025.

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In 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.

During the period ended September ~~June~~ 30, 2025, the Company and its subsidiaries and AEG and its subsidiaries had numerous financial transactions between each other which were approved by each company’s board of directors. Specifically during the period, the Company issued 201,600 shares to AEG and its affiliates having a fair value of $1.4 million. These transactions are recorded as a net receivable of $1.1 million in the Consolidated Balance Sheet as at June 30, 2025.

Specifically during the period, the Company issued 201,600 shares to AEG and its affiliates having a fair value of $1.4 million. As at

September 30, 2025

Nordic ESG:

In January of 2024, the Company issued 1,553 shares of restricted common stock valued at $6,150 per share to Nordic ESG and Impact Fund SCSp (“Nordic ESG”) as settlement of AEG’s €8m note. This resulted in Nordic ESG becoming a 10% shareholder. As of September ~~June~~ 30, 2024 Nordic ESG was a 9.7% shareholder; As of December 31, 2024 Nordic ESG was a 6.5% shareholder, and as of September ~~June~~ 30, 2025 Nordic ESG held less than 1%.

Sponsor:

On March 19, 2024 we entered into a settlement agreement with the Clean Earth Acquisitions Sponsor LLC (“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. As of December ~~June 30~~31, 2024 and September ~~2025~~30, 2025 Sponsor was aless 4%than 5% and less than 1% shareholder, respectively.

Hover:

On 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. See Footnote 6 for more details. As of September 30, 2025, Hover was a 4.3% 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.

D&O:

In 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.

On January 28, 2025, John McQuillan, a Class I director of the Company, resigned from the Company’s Board of Directors (the “Board”) effective immediately.

On 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. Mr. Wikborg will serve as an independent director until the Company’s 2025 annual meeting of stockholders.

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.

On 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.

Also 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.

On April 21, 2025 the Company issued a total of 305,000 shares of restricted common stock valued at $1,830,000, 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, 25,000 shares to Ms. Durant, our CLO.

On 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.

33 39

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On 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.

On 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.

On 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.

Consulting Agreements:

On 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.

In 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.

	Six Months Ended June 30,
	Nine Months Ended
	September 30,
Director’s remuneration	2025		2024
	(in thousands)
Remuneration in respect of services as directors	$	~~270~~432	$	~~362~~314
Remuneration in respect to long-term incentive schemes – restricted shares		1,800		-
Total	$	2,~~070~~232	$	~~362~~314

2223. Subsequent Events

Management has evaluated subsequent events that 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 period ended September ~~June~~ 30, 2025, except as disclosed below.

Additional Notes:

On 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.

In 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 Notes”) with a maturity date of December 2025, 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 Notes), the 20% Original Issue Discount shall increase 5% each month thereafter until the September 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 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.

Assigned Convertible Note & Unregistered Securities Issuance:

On August 1, 2025 a portion, $142,857, of the remaining balances left on the April and October convertible notes was purchased by a third party accredited investor from 3i (the “Assigned Convertible Note”).

On August 12, 2025, a portion equal to $22,072 of the Assigned Convertible Note was converted into 32,190 shares of unrestricted common stock, valued at $0.60 per share.

Extension of Notes with SNC:

OnThe ~~July 31, 2025 the~~ $1,250,000 promissory note issued in December of 2024 was extended toeach ~~September~~month 5,such ~~2025~~that ~~and~~its maturity ~~the~~date ~~original issue discount (OID)~~ was April ~~increased to 55%. On September 3, 2025 the note was further extended to October~~ 5, ~~2025~~2026 and the ~~OID~~original ~~was~~issue ~~increased~~discount ~~to 60%. Also on September 3, 2025 the $312,500 note issued in May of 2025 was extended to October 5, 2025 and the~~ (OID ~~was~~ ) increased to 2590%. ~~On October 22, 2025 both notes were extended to November 5, 2025 and each note’s OID was increased by an additional 5%.~~

~~1:200~~The ~~Reverse~~$312,500 ~~Stock~~note ~~Split:~~issued in May of 2025 was extended on a monthly basis such that its maturity date was April 5, 2026 and the OID increased to 55%.

OnThe ~~September 5~~$312,500 ~~2025,~~note ~~the Company effected a one-for-two hundred (1:200) reverse stock split of all~~ issued ~~and~~in September ~~outstanding shares~~ of ~~the~~2025 ~~Company’s~~was ~~common~~extended ~~stock,~~on ~~par value $0.0001 per share (the “Common Stock”) effective as of 12:01~~ a~~.m.~~ ~~Eastern~~monthly ~~Time~~basis onsuch ~~September~~that 5,its ~~2025~~maturity ~~(the~~date ~~“Reverse~~was March ~~Stock Split”)~~19, ~~vide~~ a2026 ~~Certificate of Amendment to the Third Amended~~ and ~~Restated Certificate of Incorporation of Alternus Clean Energy, Inc. (~~the ~~“Certificate~~ ofOID increased ~~Amendment”)~~to ~~filed with the Secretary of State of Delaware on September 2, 2025, and deemed effective on September 5, 2025 at 12:01 a~~35%.~~m. Eastern Time.~~

~~As a result of the 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 ~~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~~$250,000 ~~except~~note ~~to the extent of the Reverse Stock Split’ results in the fractional interests. No fractional shares were~~ issued in November ~~connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares~~ of ~~Common~~2025 ~~Stock~~was ~~received~~extended anon ~~amount~~a inmonthly ~~cash~~basis ~~(without interest or deduction) equal to the fraction of one share to which~~ such ~~stockholder~~that ~~would~~its ~~otherwise~~maturity 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 ofwas March ~~the Reverse Stock Split and the inverse of the Reverse Stock Split ratio. Proportional adjustments have also been made to the Company’s outstanding warrants~~25, ~~stock~~2026 ~~options,~~ and ~~convertible securities, as well as to~~ the ~~reserves~~OID increased ~~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~~25%.

~~All~~On March ~~share~~31, ~~and~~2026 ~~per~~the ~~share~~Company ~~amounts~~settled inwith SNC pursuant to which the ~~accompanying consolidated~~Company ~~financial~~issued ~~statements~~7,583 ~~and~~shares ~~notes~~of ~~thereto~~Series ~~have~~D ~~been~~Convertible ~~retroactively~~Preferred ~~adjusted~~Stock toas ~~reflect~~total repayment for, and the ~~reverse~~replacement ~~stock~~and ~~split~~cancellation ~~for~~of, all ~~periods presented~~of SNC's outstanding promissory notes valued at the aggregate amount of $7.583 million.

3i ~~Warrants~~ 40 ~~Adjustment:~~

In ~~September 2025, as a result of the Reverse Stock Split, the 182,474~~ ~~warrants~~ Table ~~held by 3i were further adjusted in accordance with their terms, such that the exercise price~~ of ~~each~~Contents ~~warrant is reduced to~~ ~~$0.85 per share and the total number of shares underlying the warrants increased to 4,132,660 shares.~~

~~Hover~~Note ~~Joint Venture~~Assignments:

OnIn November ~~September 30,~~ 2025, ~~the Company entered into and closed~~ a ~~Securities~~portion ~~Purchase~~equal ~~Agreement~~to ~~(“SPA”) and a Joint Venture Operating Agreement (“JVOA”) with Hover Energy LLC (“Hover”)~~$142,857 ~~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~~$1, ~~and issued 20~~250,000 ~~shares~~Note oforiginally ~~the~~issued ~~Company’s~~on December ~~Series B Convertible Preferred Stock (the “Series B”) to Hover~~4, in2024 was ~~exchange for~~purchased ~~which~~by ~~Hover~~a ~~contributed~~third ~~certain~~party ~~Microgrid~~accredited ~~Projects~~investor tofrom the ~~JV,~~note ~~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”)~~holder.

~~Additionally,~~Unregistered ~~one~~Securities 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 superceded the SAA. As part of the settlement, the Company agreed to repay the total outstanding amount of $5,150,000 owed to Hover under the SAA through the following methodsIssuance: i) $1,150,000 through the issuance of 1,150 shares of Series B, ii) $1,700,000 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) the remaining amount to be repaid in cash by the Company as mutually agreed upon by both parties from time to time.

35On November 6, 2025, a portion equal to $13,250 of the assigned Convertible Note (originally issued in October 1, 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.

~~Based~~ onNovember ~~the~~2025 negotiated value of the transaction, the Company issued 21,150 shares of Series B to Hover intended to be valued at $21.15 million, subject to completion of a third party valuation. The Company has determined the fair value of the Series B issued to Hover to be $1,000 per share, for an aggregate consideration value of approximately $21.1 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 initially valued the future revenue streams and income from these projects at over $50 million, subject to third party valuation. The transaction represents a material acquisition exceeding 20 percent of the Company’s consolidated assets, requiring the filing of an amendment to this Form 8-K with financial statements and pro forma financial information pursuant to Item 9.01 of Form 8-K within 75 days.Notes:

~~Series~~In November 2025, Bthe ~~Convertible~~Company ~~Preferred~~entered ~~Stock~~into Note Purchase Agreements with two accredited investors (each an “Investor” and together the “Investors”), pursuant to which the Company issued to each Investor a 20% Original Issue Discount promissory convertible note (the “November Notes”) with a maturity date of February 2025 in the principal sum of $250,000. Pursuant to the terms of the November 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 November Note), the 20% Original Issue Discount shall increase 5% each month thereafter until the November Notes are fully repaid. The Purchase Agreements resulted in total net proceeds of $400,000 to the Company, which the Company is using for working capital purposes. The November 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.

OnIncrease September 30, 2025, the board of directors (the “Board”) of the Company declared the formation of, and approved the issuance of, an aggregate of 21,150 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (“Series B”). The Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of the State of Delaware therein establishing the Series B Convertible Preferred Stock and describing the rights, obligations and privileges of the Series B. Concurrently, the Company issued 21,150 shares of Series B to Hover on the same date, in ~~book-entry~~Total ~~form.~~Authorized ~~The~~Common following description of the Series B does not purport to be complete and is qualified in its entirety by reference to the Certificate of Designation, which is filed as Exhibit 3.1 to this Current Report and is incorporated herein by reference.Stock:

~~General~~On December 30, 2025, Mr. ~~The~~Vincent ~~Series~~Browne, Bour ~~consists~~CEO, ofInterim 21CFO and shareholder with majority voting rights,~~150 shares.~~ ~~Each~~representing ~~share~~99.9% of ~~Series~~the Bshares ~~has~~entitled ato ~~par~~vote, ~~value~~approved an amendment to our Certificate of ~~$0.0001~~Incorporation ~~per~~to ~~share~~increase ~~and~~the atotal ~~value~~number of $1authorized shares of common stock from 600,000,000 ~~per~~to ~~share~~2,000,000,000. The ~~Series~~amendment Bto ~~has~~our noCertificate ~~stated~~of ~~maturity and~~Incorporation iswas ~~not~~filed ~~subject~~with tothe ~~any~~Secretary ~~sinking~~of ~~fund~~State of Delaware in March of 2026.

~~Conversion~~Debt Right. Each share of Series B 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 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 liquidationSettlements:

~~Adjustments of Conversion Price. If, from the Original Issue Date to~~ On December 31, ~~2026~~2025, the Company ~~has~~entered ~~issued~~into ~~any~~a ~~shares~~settlement ofagreement ~~Common~~with ~~Stock~~Jones orTrading ~~convertible~~Institutional ~~preferred~~Services ~~stock~~LLC (or“Jones”), ~~any securities~~whereby ~~convertible~~Jones ~~into~~agreed orto ~~exercisable~~reduce ~~for~~its ~~Common~~fee ~~Stock)~~owed atfrom a$1.2 ~~price~~million ~~per~~to ~~share~~$400 ~~less~~thousand, ~~than~~and ~~the~~agreed ~~then-effective~~to ~~Conversion~~accept ~~Price~~$400 ~~(the~~thousand ~~“Original Conversion~~worth ~~Price”)~~ of ~~the~~ Series BC Convertible Preferred Stock (athe “~~Dilutive~~Series ~~Issuance~~C”), ~~then~~as ~~the~~full ~~Original~~and ~~Conversion~~final ~~Price~~settlement, ~~shall~~and ~~be reduced to~~ the ~~lowest~~ ~~price~~Company ~~per~~issued ~~share~~400 shares of ~~Common~~Series ~~Stock~~C orto ~~convertible preferred stock issued during this period~~Jones.

~~Restriction~~Also on December ~~Conversion.~~31, In2025, ~~no event shall~~ the ~~Holder~~Company ~~have~~entered ~~the~~into ~~right~~a orsettlement ~~the~~agreement ~~Company~~with beSCM ~~required~~Tech toLLC ~~convert~~(“SCM”), aswhereby ~~applicable,~~the ~~shares~~parties ofagreed ~~Series~~that ~~B if as a result of such conversion~~ the ~~aggregate~~total ~~number~~balance ofowed ~~shares~~to ofSCM ~~Common~~was ~~Stock~~$2.75 ~~beneficially~~million ~~owned by such Holder~~ and ~~its~~SCM ~~Affiliates~~agreed ~~and~~to ~~any~~accept ~~other~~$2.75 ~~persons~~million ~~whose~~worth ~~beneficial ownership~~ of ~~Common~~Series ~~Stock~~C ~~would~~as befull ~~aggregated~~and ~~with~~final ~~the~~settlement, ~~shareholder~~and ~~for purposes of Section 13(d) of~~ the ~~1934~~Company ~~Act~~issued 2,750 ~~would exceed 19.99% of the outstanding~~ shares of ~~the~~Series ~~Common~~C ~~Stock~~to ~~following such conversion~~SCM.

~~Restriction~~The onterms ~~Sales.~~of ~~Beginning on~~ the ~~month~~ ~~after~~Series ~~the~~C ~~Holder~~are isset ~~able~~forth toin ~~convert~~detail ~~the~~below ~~Series B~~ and ~~utilize~~in ~~an exemption under SEC Rule 144,~~ the ~~Holder~~Certificate ~~may~~of ~~sell~~Designation ~~a maximum amount~~ of ~~Common~~Series ~~Shares~~C, ~~per~~filed ~~month~~as ~~not~~part ~~to exceed the average daily volume~~ of the Company’s ~~common~~current ~~stock~~report inon ~~the~~Form ~~prior~~8K ~~month~~filed on March 9, 2026.

~~Voting~~Additionally, ~~Rights.~~on March ~~Each~~31, ~~holder~~2026, ~~of Series B has full voting rights and powers equal to~~ the ~~voting~~Company ~~rights~~issued 684 ~~and~~shares ~~powers~~ of ~~holders of common stock, and for so long as~~ Series BE isConvertible ~~issued and~~Preferred ~~outstanding,~~Stock (the ~~holders of~~ “Series BE”) ~~shall vote together~~ as atotal ~~single~~repayment ~~class~~for, ~~with~~and the ~~holders~~replacement ~~of the Company’s common stock~~ and ~~the~~ ~~holders~~cancellation of, ~~any~~two ~~other~~outstanding ~~class~~promissory ornotes ~~series~~in ~~of shares entitled to vote on all such matters equal to~~ the ~~number~~aggregate ofamount ~~whole shares~~ of ~~Common Stock~~$684 ~~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~~thousand. ~~(For avoidance of doubt, voting rights are on an ‘as-converted’ basis.)~~

~~Dividend~~Executive ~~Rights~~Officer Resignation. On February ~~The holders of Series B~~13, ~~as such~~2026, ~~will~~David ~~not~~Farrell beresigned ~~entitled~~as toChief ~~receive~~Commercial ~~dividends~~Officer of ~~any~~the ~~kind~~Company, effective immediately.

~~Liquidation Preference. The holders of~~ Series BC ~~shall~~Convertible bePreferred ~~entitled to receive distributions in the event of any liquidation, dissolution or winding up of the Company pari passu with the Common~~ Stock.:

36On March 3, 2026, the board of directors (the “Board”) of the Company declared the formation of an aggregate of up to 12,000 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (“Series C”). 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 C Convertible Preferred Stock and describing the rights, obligations and privileges of the Series C. Concurrently, the Company issued 5,775 shares of Series C to the Purchasers and debt holders on the same date, in book-entry form. On April 21, 2026 the Company issued an additional 240 shares of Series C to an additional Purchaser. The following description of the Series C does not purport to be complete and is qualified in its entirety by reference to the Certificate of Designation, which is filed as Exhibit 3.1 to this Current Report and is incorporated herein by reference.

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General. The Series C consists of a total of 12,000 shares authorized and 5,775 shares issued as of the date of this Report. Each share of Series C has a par value of $0.0001 per share and a value of $1,000 per share. The Series C has no stated maturity and is not subject to any sinking fund.

Conversion Right. 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.

Adjustments of Conversion Price. If, from the Original Issue Date to 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.

Restriction on Conversion. In 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 13(d) of the 1934 Act, would exceed 19.99% of the outstanding shares of the Common Stock following such conversion.

Restriction on Sales. Beginning on the month after the Holder is able to convert the Series C 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.

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.)

Dividend Rights. The holders of Series C, as such, will not be entitled to receive dividends of any kind.

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.

March 2026 Funding:

Subscription Agreements

On 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”).

The aggregate gross proceeds to the Company were $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, subject to certain milestones. Additionally, on April 21, 2026 the Company closed an additional EUR200,000 (approximately $235,000) investment pursuant to the terms of the Offering, and issued a EUR250,000 (approximately $293,000) 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.

Original Issue Discount Secured Promissory Notes

The 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.

The 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.

The 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.

Extension of Notes:

Also on 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.

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Intercompany Transfer of EverOn Energy LLC (“EverOn”)

On March 24, 2026, the Company transferred its 51% membership interest in EverOn to its wholly owned subsidiary, Alt Alliance LLC.

March 27, 2026 Subscription Agreement:

On 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.

Put Option Agreement

Simultaneously 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.

Series D Convertible Preferred Stock:

On 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 Exhibit 3.1 to this Current Report and is incorporated herein by reference.

General. The Series D consists of a total of 20,000 shares authorized and 10,283 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.

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.

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.

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.

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.

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.)

Dividend Rights. The holders of Series D, as such, will not be entitled to receive dividends of any kind.

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.

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Series E Convertible Preferred Stock:

On 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 the Purchaser and 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 Exhibit 4.2 to this Current Report and is incorporated herein by reference.

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.

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.

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.

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.

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.

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.)

Dividend Rights. The holders of Series E, as such, will not be entitled to receive dividends of any kind.

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

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the ~~condensed~~ consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 27, 2025. In addition to historically consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC.

Overview

We are a renewable energy company committed to advancing sustainable solutions. With a focus on utility-scale projects, such as utility solar parks, microgrids and battery storage, we aim to deliver comprehensive, clean energy across Europe and America. Through strategic investments, we are building a portfolio poised to lead the transition to a sustainable energy future.

The Company was incorporated in Delaware on May 14, 2021, and was originally known as Clean Earth Acquisitions Corp. (“Clean Earth”).

On 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 11,500 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.

The Company plans to use annual recurring revenues (“ARR”) as a key metric in its financial management information and believes this method better reflects the long-term stability of operations in the future. Annual recurring revenues are defined as the estimated future revenue generated by operating solar parks based on the remaining term by the price received per mega-watt hour (MWh) of energy produced multiplied by the estimated production from each solar park over a full year of operation. It should be noted that the actual revenues reported by the Company in a particular year may be lower than the annual recurring revenues because not all parks may be revenue generating for the full year in their first year of operation. The Company must also account for the timing of acquisitions that take place throughout the financial year.

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Impacts of the Ukraine/Russia Conflict

The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity proceeds and additional sanctions are imposed. In addition to the human toll and impact of the events on entities that have operations in Russia, Ukraine, or neighboring countries (e.g., Belarus, Poland, Romania) or that conduct business with their counterparties, the war is increasingly affecting economic and global financial markets and exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption. ~~Althought~~ Although we no longer have physical facilities in Romania, the Company has seen fluctuations in energy rates due to inflation, increased interest rates, and other macro-economic factors.

Known trends or Uncertainties

The Company has a working capital deficiency and negative equity, and management has determined there is doubt about the Company’s ability to continue as a going concern, if planned financing and/or equity raises do not occur and/or if the terms of financings or equity raises are not acceptable to the Company. Refer to Footnote 2 of the accompanying financial statements.

The Company is currently working on several processes to address the going concern issue. We are working with multiple global banks and funds to secure the necessary corporate and project level financing to execute our transatlantic business plan and we have sold or otherwise discontinued operations in order to eliminate significant amounts of debt and other obligations.

Competitive Strengths

The Company believes the following competitive strengths have contributed and will continue to contribute to its success:

●	*Fully Integrated Clean Energy Provider Model:*

We operate as a comprehensive energy provider, managing the full renewable energy value chain across both utility scale and behind-the-meter microgrid markets. This “develop-to-own or sell” strategy enables the Company to capture greater margin and retain control from early-stage development through to long-term operations or strategic monetization, unlike peers focused solely on operational asset acquisitions.

●	*Experienced and Adaptive Management Team:*

The leadership team brings decades of collective experience in capital markets, energy infrastructure, project development, and public company governance. Recent partnerships also bolster technical and operational capabilities in areas such as microgrids, reinforcing the Company’s strategic direction.

●	*Capital-Efficient Growth Through Project-Level Leverage:*

Our approach emphasizes projects with minimal to no owner equity requirements, particularly in the U.S. where tax equity (ITC) and long-term debt can fund up to 100% of project costs. This model allows for rapid, capital-efficient scaling and high-return deployments, freeing up corporate equity for strategic growth.

●	*Transatlantic Market Footprint Mitigates Risk:*

With operations and revenue targets split between North America and Europe by 2029, Alternus is uniquely positioned to reduce geopolitical and regulatory concentration risk. The diversified presence enhances resilience and positions the Company to capture incentives from multiple clean energy policy regimes.

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●	*Unique Microgrid Technology and Offerings:*

Through partnerships such as with Hover Energy, Alternus delivers differentiated microgrid solutions combining rooftop wind, solar, storage, and AI-based energy management systems. This provides a compelling and exclusive offering, particularly in the high-growth commercial and industrial market segments.

●	*Proven International Expansion and Partner Network:*

The Company’s historical ability to enter new geographies and establish strong local partnerships is expected to enable consistent expansion across Europe and North America once the Company has completed plans to improve and stabilize its balance sheet. These local relationships and Alternus’ development track record provide a competitive edge in securing grid access, permits, and financing in highly competitive markets.

●	*Flexible and Technology Agnostic Strategy:*

Alternus is not tied to specific technologies or suppliers, allowing it to source best-in-class components and services globally. This flexibility supports cost optimization and future proofing as new solutions and innovations emerge in the renewable energy space.

Vision and Strategy

We are expanding beyond our core utility solar operations by integrating microgrids and on-site generation systems that provide customers with energy resilience, grid independence, and long-term cost savings. These customer deployed systems enable faster revenue realization and lower capital intensity compared to utility scale projects.

To accelerate this transition, we are actively forming strategic partnerships and pursuing targeted ventures and acquisitions in high-growth areas such as battery storage and circular economy energy systems. These additions enhance our technical capabilities, diversify revenue streams, and strengthen our ability to meet the rising demand for consistent power driven by AI, data centers, and industrial onshoring.

This strategy builds on our foundation as an integrated independent power producer (IPP) with experience developing a portfolio of renewable energy assets across North America and Europe. By owning and operating long-term contracted energy projects, we generate stable, recurring income while unlocking lasting value for shareholders.

With strong regulatory tailwinds and rapidly growing global demand for sustainable and reliable energy, Alternus is well positioned to scale as a more comprehensive energy provider, broadening our market reach, enhancing financial performance, and advancing our mission to power a cleaner, more resilient energy future.

To achieve its goals, the Company intends to pursue the following strategies:

●

Continue our growth strategy of acquiring utility scale clean energy (e.g., solar, battery storage and other technologies) projects that are either in development, in construction, newly installed or already operational, in order to build a diversified portfolio across multiple geographies;

●

Pursue expansion into complementary or strategic market segments either through M&A or strategic partnerships that enhance and diversify our core energy generation business. These additional segments are designed to create independent income streams and strengthen our asset platform;

●

Strengthen long-term relationships with high-quality developers and other partners, both local and international, to reduce competition in acquisition pricing and provide Alternus with exclusive rights to projects at varying stages of development. This provides the Company with a better understanding of the markets we address and, in some cases, enables it to contract for projects in a less competitive environment;

●

Expand our US and European portfolio in regions with attractive returns on investments, and increase the Company’s long-term recurring revenue and cash flow;

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●

Secure strong and predictable cash flows via long-term FIT (feed-in tariff) contracts combined with the Company’s efficient operations. This allows for high leverage capacity and flexibility of debt structuring. Our strategy is to reinvest of project cash flows into additional projects to provide non-dilutive capital for Alternus to “self-fund” organic growth;

●

Optimization of financing sources to support long-term growth and profitability in a cost-efficient manner;

●

As a renewable energy company, we are committed to growing our portfolio of projects in the most sustainable way possible. Alternus is highly aware and conscious of the ever growing need to mitigate the effects of climate change which is evident by its core strategy. As the Company grows, it intends to establish a formal sustainability policy framework in order to ensure that all project development is carried out in a sustainable manner, mitigating any potential local and environmental impacts identified during the development, construction, and operational process.

Given the long-term nature of our business, Alternus operates with a strategic focus on sustained value creation rather than short-term quarterly performance. Our approach prioritizes maximizing long-term shareholder returns by developing projects from the ground up and acquiring assets at various stages of maturity, whether in development, under construction, or already operational. In parallel, we are expanding into complementary market segments that enhance our operational capabilities and financial performance, strengthening the foundation for consistent, scalable growth.

Key Factors that Significantly Affect Company Results of Operations and Business

The Company expects the following factors will affect its results of operations – inflation and energy rate fluctuations.

Offtake Contracts

Company revenue is primarily a function of the volume of electricity generated and sold by its renewable energy facilities as well as, where applicable, the sale of green energy certificates and other environmental attributes related to energy generation. The Company’s current portfolio of renewable energy facilities is generally contracted under long-term FIT programs or PPAs with investment grade counterparties. Pricing of the electricity sold under these FITs and PPAs is generally fixed for the duration of the contract, although some of its PPAs have price escalators based on an index (such as the consumer price index) or other rates specified in the applicable PPA.

Project Operations and Generation Availability

The Company revenue is a function of the volume of electricity generated and sold by Company renewable energy facilities. The volume of electricity generated and sold by the Company’s renewable energy facilities during a particular period is impacted by the number of facilities that have achieved commercial operations, as well as both scheduled and unexpected repair and maintenance required to keep its facilities operational.

The costs the Company incurs to operate, maintain, and manage renewable energy facilities also affect the results of operations. Equipment performance represents the primary factor affecting the Company’s operating results because equipment downtime impacts the volume of the electricity that the Company can generate from its renewable energy facilities. The volume of electricity generated and sold by the Company’s facilities will also be negatively impacted if any facilities experience higher than normal downtime as a result of equipment failures, electrical grid disruption or curtailment, weather disruptions, or other events beyond the Company’s control.

Seasonality and Resource Variability

The amount of electricity produced and revenues generated by the Company’s solar generation facilities is dependent in part on the amount of sunlight, or irradiation, where the assets are located. As shorter daylight hours in winter months result in less irradiation, the electricity generated by these facilities will vary depending on the season. Irradiation can also be variable at a particular location from period to period due to weather or other meteorological patterns, which can affect operating results. As most of the Company’s solar power plants are in the Northern Hemisphere, the Company expects its current solar portfolio’s power generation to be at its lowest during the first and fourth quarters of each year. Therefore, the Company expects first and fourth quarter solar revenue to be lower than in other quarters. As a result, on average, each solar park generates approximately 15% of its annual revenues in Q1 every year, 35% in each of Q2 and Q3, and the remaining 15% in Q4. The Company’s costs are relatively flat over the year, and so the Company will always report lower profits in Q1 and Q4 as compared to the middle of the year.

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Interest Rates on Company Debt

Interest rates on the Company’s senior debt are mostly variable for the full term of finance at interest rates ranging from 6% to 30%.

In addition to the project specific senior debt, the Company uses a small number of promissory notes in order to reduce, and in some cases eliminate, the requirement for the Company to provide equity in the acquisition of the projects.

Cash Distribution Restrictions

In certain cases, the Company, through its subsidiaries, obtain project-level or other limited or non-recourse financing for Company renewable energy facilities which may limit these subsidiaries’ ability to distribute funds to the Company for corporate operational costs. These limitations typically require that the project-level cash is used to meet debt obligations and fund operating reserves of the operating subsidiary. These financing arrangements also generally limit the Company’s ability to distribute funds generated from the projects if defaults have occurred or would occur with the giving of notice or the lapse of time, or both.

Renewable Energy Facility Acquisitions and Investments

The Company’s long-term growth strategy is dependent on its ability to acquire additional renewable power generation assets. This growth is expected to be comprised of additional acquisitions across the Company’s scope of operations both in its current focus countries and new countries. Our operating revenues are insufficient to fund our operations and our assets already are pledged to secure our indebtedness to various third party secured creditors, respectively. The unavailability of additional financing could require us to delay, scale back, or terminate our acquisition efforts as well as our own business activities, which would have a material adverse effect on the Company and its viability and prospects.

Management believes renewable power has been one of the fastest growing sources of electricity generation globally over the past decade. The Company expects the renewable energy generation segment to continue to offer growth opportunities driven by:

●

The continued reduction in the cost of solar and other renewable energy technologies, which the Company believes will lead to grid parity in an increasing number of markets;

●

Distribution charges and the effects of an aging transmission infrastructure, which enable renewable energy generation sources located at a customer’s site, or distributed generation, to be more competitive with, or cheaper than, grid-supplied electricity;

●

The replacement of aging and conventional power generation facilities in the face of increasing industry challenges, such as regulatory barriers, increasing costs of and difficulties in obtaining and maintaining applicable permits, and the decommissioning of certain types of conventional power generation facilities, such as coal and nuclear facilities;

●

The ability to couple renewable energy generation with other forms of power generation and/or storage, creating a hybrid energy solution capable of providing energy on a 24/7 basis while reducing the average cost of electricity obtained through the system;

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●

The desire of energy consumers to lock in long-term pricing for a reliable energy source;

●

Renewable energy generation’s ability to utilize freely available sources of fuel, thus avoiding the risks of price volatility and market disruptions associated with many conventional fuel sources;

●

Environmental concerns over conventional power generation; and

●

Government policies that encourage the development of renewable power, such as country, state or provincial renewable portfolio standard programs, which motivate utilities to procure electricity from renewable resources.

Access to Capital Markets

The Company’s ability to acquire additional clean power generation assets and manage its other commitments will likely be dependent on its ability to raise or borrow additional funds and access debt and equity capital markets, including the equity capital markets, the corporate debt markets, and the project finance market for project-level debt. The Company accessed the capital markets several times in 2024 and during the ~~six~~nine months ended ~~June~~September 30, 2025, in connection with long-term project debt, and corporate loans and equity. Limitations on the Company’s ability to access the corporate and project finance debt and equity capital markets in the future on terms that are accretive to its existing cash flows would be expected to negatively affect its results of operations, business, and future growth.

Foreign Exchange

The Company’s operating results are reported in United States (USD) Dollars. The Company’s current project revenue and expenses are generated in other currencies, including the Euro (EUR), the Romanian Lei (RON), and the Polish Zloty (PLN). This mix may continue to change in the future if the Company elects to alter the mix of its portfolio within its existing markets or elect to expand into new markets. In addition, the Company’s investments (including intercompany loans) in renewable energy facilities in foreign countries are exposed to foreign currency fluctuations. As a result, the Company expects revenues and expenses will be exposed to foreign exchange fluctuations in local currencies where the Company’s renewable energy facilities are located. To the extent the Company does not hedge these exposures, fluctuations in foreign exchange rates could negatively impact profitability and financial position.

Key Metrics

Operating Metrics

The Company regularly reviews several operating metrics to evaluate its performance, identify trends affecting its business, formulate financial projections and make certain strategic decisions. The Company considers a solar park operating when it has achieved connection and begins selling electricity to the energy grid.

Operating Nameplate capacity

The Company measures the electricity-generating production capacity of its renewable energy facilities in nameplate capacity. The Company expresses nameplate capacity in direct current (DC), for all facilities. The size of the Company’s renewable energy facilities varies significantly among the assets comprising its portfolio.

The Company believes the combined nameplate capacity of its portfolio is indicative of its overall production capacity and period to period comparisons of its nameplate capacity are indicative of the growth rate of its business. The production capacity listed below for the United States and Romania reflect the actual production from those parks during the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024. The table below outlines the Company’s operating renewable energy facilities as of ~~June~~September 30, 2025 and 2024:

	Six Months Ended June 30,
	Nine Months Ended
	September 30,
MW (DC) Nameplate capacity by country – continuing operations	2025		2024
United States		-		3.8
Total		-		3.8
Discontinued Operations:
Netherlands		-		11.8
Poland		-		88.4
Romania		-		40.1
Total		-		40140.13
Total for the period		-		43144.91

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Consolidated Results of Operations

The following table illustrates the consolidated results of continuing operations for the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024:

	Three Months Ended June 30						Six Months Ended June 30
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024
Revenues	$	-		$	9493		$	-		$	~~187~~280
Operating Expenses
Cost of revenues		-			(~~159~~47	)		-			(~~174~~71	)
Selling, general and administrative		(~~3,689~~984	)		(21,~~781~~524	)		(56,~~179~~163	)		(57,~~888~~204	)
Depreciation, amortization, and accretion		-			(5052	)		(130	)		(~~120~~175	)
Development costs		-			-(741	)		-			(7748	)
Gain on sale of Spanish & Italian subsidiaries		11,924			-			15,513			-
Gain on sale of subsidiaries		-			-			15,513			-
Total operating income/ (expenses)		~~8,235~~(984	)		(2,~~990~~364	)		109,~~204~~220			(68,~~189~~198	)
Income/(loss) from operations		~~8,235~~(984	)		(2,~~896~~271	)		109,~~204~~220			(67,~~002~~918	)
Other income/(expense):
Other income (expense):
Interest expense		(~~1,250~~399	)		(~~809~~1,572	)		(3,~~440~~839	)		(24,~~264~~854	)
Fair value movement of FPA Asset		-			-			-			(483	)
Fair value movement of convertible debt		(882	)		(182	)		(887	)		(182	)
Fair value movement of convertible notes		(1,377	)		1,079			(2,263	)		898
Warrant Issuance costs		(753	)		-			(753	)		-
Debt restructuring costs		-			-			(753	)		-
Fair value movement of warrants		162			-			162			5
Fair value movement of warrant derivative liability		(676	)		-			(514	)		-
Gain on extinguishment of debt		-			-			-			179
Gain on settlement of payables		426			-			426			-
Other expense		(232	)		-			(232	)		(231	)
Loss on settlement of liabilities		(151	)		-			(151	)		(948	)
Other income		(46	)		3			-			7
Loss on settlement of SAA with Hover		(2,025	)		-			(2,025	)		-
Loss on issuance of debt		-(19	)		~~(948~~-	)		-(19	)		~~(948~~-	)
Total other expenses		(3,001	)		(1,936	)		(5,150	)		(3,917	)
Loss on extinguishment of debt		(3,404	)		-			(3,404	)		-
Income / (Loss) before provision for income taxes		5,234			(4,832	)		5,054			(9,919	)
Provision for loss from related party		(1,139	)		-			(1,139	)		(8	)
Income / (Loss) from continuing operations		5,234			(4,832	)		5,054			(9,919	)
Other expense		-			64			(232	)		67
Other income		-						-
Income / (Loss) from continuing operations		(9,749	)		(2,700	)		(4,694	)		(13,246	)
Discontinued operations:
Loss from operations of discontinued business component		-			(21,~~020~~735	)		-			(56,~~662~~950	)
Gain on sale of discontinued operations, net assets		-			15(635	)		-			21,~~165~~531
Income/(loss) from discontinued operations		-			(2,~~005~~370	)		-			(35,~~497~~419	)
Net income /(loss)	$	5(9,~~234~~749	)	$	(65,~~837~~070	)	$	5(4,~~054~~694	)	$	(1318,~~416~~486	)
Net income / (loss)		5(9,~~234~~749	)		(65,~~837~~070	)	$	5(4,~~054~~694	)	$	(1318,~~416~~486	)
Foreign currency translation adjustment		~~731~~(100	)		~~512~~(2,659	)		~~195~~94			(~~720~~3,379	)
Comprehensive income/(loss)	$	5(9,~~965~~849	)	$	(67,~~325~~729	)	$	5(4,~~249~~600	)	$	(1421,~~136~~865	)
Continuing operations, basic		10.95			(365.31	)		19.16			(749.91	)
Continuing operations, basic and diluted		(14.48	)		(163.08	)		(11.69	)		(789.26	)
Continuing operations, diluted		7.12			(365.31	)		19.10			(749.91	)
Discontinued operations, basic and diluted		-			(143.15	)		-			(327.31	)
Discontinued operations, basic		-			(151.58	)		-			(264.39	)
Total loss per share of common stock, basic and diluted		(14.48	)		(306.23	)		(11.69	)		(1,116.58	)
Discontinued operations, diluted		-			(151.58	)		-			(264.39	)
Weighted-average common stock outstanding, basic & diluted		673,133			16,556			401,699			16,556
Total earnings/(loss) per share of common stock, basic		10.95			(516.90	)		19.16			(1,014.29	)
Total earnings/(loss) per share of common stock, diluted		7.12			(516.90	)		19.10			(1,014.29	)
Weighted-average common stock outstanding, basic		477,867			13,227			263,732			13,227
Weighted-average common stock outstanding, diluted		944,154			13,227			264,558			13,227

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~~Three~~ ~~and~~ Table ~~Six~~of ~~Months~~Contents ~~Ended June 30, 2025 compared to June 30, 2024.~~

Three and Nine Months Ended September 30, 2025 compared to September 30, 2024.

The Company generates its revenue from the sale of electricity from its solar parks. The revenue is from FIT, PPA, REC, or in the day-ahead or spot market.

Revenue

Revenue for the three and ~~six~~nine months ended ~~June~~ September 30, 2025 and 2024 were as follows:

	Three Months Ended June 30,
	Three Months Ended September 30,
Revenue by Country	2025		2024		Change ($)			Change (%)
					Change			Change
Revenue by Country	2025		2024		($)			(%)
	(in thousands)
United States		-		93		(93	)		(100	)%
Total for continuing operations	$	-	$	93	$	(93	)		(100	)%
Discontinued Operations:
Netherlands	$	-	$	-	$	-			(100	)%
Poland		-		-		-			(100	)%
Romania		-		3,~~754~~649		(3,~~754~~649	)		(100	)%
Total for discontinued operations	$	-	$	3,~~754~~649	$	(3,~~754~~649	)		(100	)%
Total for the period	$	-	$	3,~~847~~742	$	(3,~~847~~742	)		(100	)%

	Six Months Ended June 30,
	Nine Months Ended September 30,
Revenue by Country	2025		2024		Change ($)			Change (%)
					Change			Change
Revenue by Country	2025		2024		($)			(%)
	(in thousands)
United States		-		~~187~~280		(~~187~~280	)		(100	)%
Total for continuing operations	$	-	$	~~187~~280	$	(~~187~~280	)		(100	)%
Discontinued Operations:
Netherlands	$	-	$	16	$	(16	)		(100	)%
Poland		-		106		(106	)		(100	)%
Romania		-		59,~~839~~489		(59,~~839~~489	)		(100	)%
Total for discontinued operations	$	-	$	59,~~961~~611	$	(69,~~118~~611	)		(100	)%
Total for the period	$	-	$	59,~~961~~891	$	(69,~~118~~891	)		(100	)%

Revenue for continuing operations decreased by $.01 million and $0.2 million for the three and ~~six~~ nine months, respectively, ended ~~June~~September 30, 2025 compared to the same period in 2024, as there was only one country producing revenue in 2024 (Lightwave parks) compared to no operating parks owned by the Company in 2025.

44 52

~~Revenue~~ ~~for discontinued operations decreased~~ by Table ~~$3.8~~of ~~million~~Contents ~~and $6.0 million for the three and six months, respectively, ended June 30, 2025 compared to the same period in 2024,~~ ~~as all operating parks in Poland, the Netherlands, and Romania were sold on January 19, 2024, February 21, 2024 and October 3, 2024, respectively. Refer to Footnote 14 for additional sale information.~~

	Three Months Ended June 30,
Revenue by Offtake Type	2025		2024		Change ($)			Change (%)
	(in thousands)
Energy Offtake Agreements (PPA)	$	-	$	93	$	(93	)		(100	)%
Total for continuing operations	$	-	$	93	$	(93	)		(100	)%
Discontinued Operations:
Country Renewable Programs (FIT)	$	-	$	203	$	(203	)		(100	)%
Green Certificates		-		2,021		(2,021	)		(100	)%
Energy Offtake Agreements (PPA)		-		1,530		(1,530	)		(100	)%
Other Revenue		-		-		-			-
Total for discontinued operations	$	-	$	3,754	$	(3,754	)		(100	)%
Total for the period	$	-	$	3,847	$	(3,847	)		(100	)%

Revenue for discontinued operations decreased by $3.8 million and $6.0 million for the three and nine months, respectively, ended September 30, 2025 compared to the same period in 2024, as all operating parks in Poland, the Netherlands, and Romania were sold on January 19, 2024, February 21, 2024 and October 3, 2024, respectively. Refer to Footnote 14 for additional sale information.

	Six Months Ended June 30,
	Three Months Ended September 30,
Revenue by Offtake Type	2025		2024		Change ($)			Change (%)
					Change			Change
Revenue by Offtake Type	2025		2024		($)			(%)
	(in thousands)
Energy Offtake Agreements (PPA)	$	-	$	~~187~~93	$	(~~187~~93	)		(100	)%
Total for continuing operations	$	-	$	~~187~~93	$	(~~187~~93	)		(100	)%
Discontinued Operations:
Country Renewable Programs (FIT)	$	-	$	~~402~~115	$	(~~402~~115	)		(100	)%
Green Certificates		-		3,589		(3,589	)		(100	)%
Guarantees of Origin		-	$	2,157		(2,157	)		(100	)%
Energy Offtake Agreements (PPA)		-		1,930		(1,930	)		(100	)%
Green Certificates		-		-		-			(100	)%
Other Revenue		-		40		(40	)		100	%
Energy Offtake Agreements (PPA)		-		1,377		(1,377	)		(100	)%
Total for discontinued operations	$	-	$	5,961	$	(5,961	)		(100	)%
Other Revenue		-		-		-			(100	)%
Total for the period	$	-	$	6,148	$	(6,148	)		(100	)%
Total for discontinued operations	$	-	$	3,649	$	(3,649	)		(100	)%
Total for the period	$	-	$	3,742	$	(3,742	)		(100	)%

	Nine Months Ended September 30,
					Change			Change
Revenue by Offtake Type	2025		2024		($)			(%)
	(in thousands)
Energy Offtake Agreements (PPA)	$	-	$	280		(280	)		(100	)%
Total for continuing operations	$	-	$	280	$	(280	)		(100	)%

Discontinued Operations:
Country Renewable Programs (FIT)	$	-	$	330	$	(330	)		(100	)%
Guarantees of Origin		-		5,753		(5,753	)		(100	)%
Green Certificates		-		-		-			(100	)%
Energy Offtake Agreements (PPA)		-		3,494		(3,494	)		(100	)%
Other Revenue		-		34		(34	)		(100	)%
Total for discontinued operations	$	-	$	9,611	$	(9,611	)		(100	)%
Total for the period	$	-	$	9,891	$	(9,891	)		(100	)%

Cost of Revenues

The Company capitalizes its equipment costs, development costs, engineering, and construction related costs that are deemed recoverable. The Company’s cost of revenues with regards to its solar parks is primarily a result of the asset management, operations, and maintenance, as well as tax, insurance, and lease expenses. Certain economic incentive programs, such as FIT regimes, generally include mechanisms that ratchet down incentives over time. As a result, the Company seeks to connect its solar parks to the local power grids and commence operations in a timely manner to benefit from more favorable existing incentives. Therefore, the Company generally seeks to make capital investments during times when incentives are most favorable.

45 53

~~Cost~~ ~~of revenues for the three and six months~~ ~~ended~~ Table ~~June~~of ~~30,~~Contents ~~2025 and 2024 were as follows:~~

	Three Months Ended June 30,
Cost of Revenues by Country	2025		2024		Change ($)			Change (%)
	(in thousands)
United States		-		159		(159	)		(100	)%
Total for continuing operations	$	-	$	159	$	(159	)		(100	)%
Discontinued Operations:
Netherlands	$	-	$	-	$	-			(100	)%
Poland		-		-		-			(100	)%
Romania		-		1,485		(1,485	)		(100	)%
Total for discontinued operations	$	-	$	1,485	$	(1,485	)		(100	)%
Total for the period	$	-	$	1,644	$	(1,644	)		(100	)%

Cost of revenues for the three and nine months ended September 30, 2025 and 2024 were as follows:

	Six Months Ended June 30,
	Three Months Ended September 30,
Cost of Revenues by Country	2025		2024		Change ($)			Change (%)
					Change			Change
Cost of Revenues by Country	2025		2024		($)			(%)
	(in thousands)
United States		-		~~174~~47		(~~174~~47	)		(100	)%
Total for continuing operations	$	-	$	~~174~~47	$	(~~174~~47	)		(100	)%
Discontinued Operations:
Netherlands	$	-	$	~~115~~-	$	~~(115~~-	)		(100	)%
Poland		-		~~101~~-		~~(101~~-	)		(100	)%
Romania		-		21,~~304~~374		(21,~~304~~374	)		(100	)%
Total for discontinued operations	$	-	$	21,~~670~~374	$	(21,~~670~~374	)		(100	)%
Total for the period	$	-	$	21,~~694~~421	$	(21,~~694~~421	)		(100	)%

Cost of revenues for continuing operations decreased by $159,000 and $174,000 for the three and six months, respectively, ended June 30, 2025 compared to the same period in 2024. The decrease was due to the operating parks in the United States being sold in November of 2024.

	Nine Months Ended September 30,
					Change			Change
Cost of Revenues by Country	2025		2024		($)			(%)
	(in thousands)
United States		-		71		(71	)		(100	)%
Total for continuing operations	$	-	$	71	$	(71	)		(100	)%

Discontinued Operations:
Netherlands	$	-	$	115	$	(115	)		(100	)%
Poland		-		101		(101	)		(100	)%
Romania		-		3,678		(3,678	)		(100	)%
Total for discontinued operations	$	-	$	3,894	$	(3,894	)		(100	)%
Total for the period	$	-	$	3,965	$	(3,965	)		(100	)%

Cost of revenues for ~~discontinued~~continuing operations decreased by $~~1.6~~47,000 ~~million~~ and $~~2.7~~71,000 ~~million~~ for the three and ~~six~~ nine months, respectively, ended ~~June~~September 30, 2025 compared to the same period in 2024, . The decrease was due to ~~all~~the operating parks in ~~Poland,~~ the ~~Netherlands,~~United ~~and~~States ~~Romania~~ being sold onin ~~January~~November ~~19,~~of 2024~~, February 21, 2024 and October 3, 2024, respectively~~.

Cost of revenues for discontinued operations decreased by $1.4 million and $3.9 million for the three and nine months, respectively, ended September 30, 2025 compared to the same period in 2024, due to all operating parks in Poland, the Netherlands, and Romania being sold on January 19, 2024, February 21, 2024 and October 3, 2024, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 were as follows:

	Three Months Ended June 30,
	Three Months Ended September 30,
	2025		2024		Change ($)			Change (%)
					Change			Change
	2025		2024		($)			(%)
	(in thousands)
Selling, general and administrative	$	~~3,689~~984	$	21,~~781~~524	$	~~908~~(540	)		33(35	)%
Total for continuing operations	$	~~3,689~~984	$	21,~~781~~524	$	~~886~~(540	)		33(35	)%
Discontinued Operations:
Selling, general and administrative	$	-	$	~~2,020~~77	$	(~~2,020~~77	)	$	(100	)%
Total for discontinued operations	$	-	$	~~2,020~~77	$	(~~2,020~~77	)	$	(100	)%
Total for the period	$	~~3,689~~984	$	41,~~801~~601	$	(~~1,112~~617	)		(2339	)%

46 54

	Six Months Ended June 30,
	2025		2024		Change ($)			Change (%)
	(in thousands)
Selling, general and administrative	$	5,179	$	5,888	$	(709	)		(12	)%
Total for continuing operations	$	5,179	$	5,888	$	(731	)		(12	)%
Discontinued Operations:
Selling, general and administrative	$	-	$	5,662	$	(5,662	)	$	(100	)%
Total for discontinued operations	$	-	$	5,662	$	(5,662	)	$	(100	)%
Total for the period	$	5,179	$	11,550	$	(6,371	)		(55	)%

Table of Contents

Selling, general and administrative expenses for continuing operations increased by $0.9 million for the three months ended June 30, 2025, due primarily to non cash stock compensation costs of approximately $2.1 million. Selling, general and administrative expenses for continuing operations decreased $0.7 million for the six months ended June 30, 2025 compared to the same period in 2024. The majority of this decrease was from a decrease in compensation costs, consulting expenses, insurance and the accounting and legal costs associated with audit preparation and Nasdaq listing costs during 2024 offset by the stock compensation costs during the period.

	Nine Months Ended September 30,
					Change			Change
	2025		2024		($)			(%)
	(in thousands)
Selling, general and administrative	$	6,163	$	7,204		(1,041	)		(14	)%
Total for continuing operations	$	6,163	$	7,204	$	(1,041	)		(14	)%

Discontinued Operations:
Selling, general and administrative	$	-	$	1,559	$	(1,559	)		(100	)%
Total for discontinued operations	$	-	$	1,559	$	(1,559	)		(100	)%
Total for the period	$	6,163	$	8,763	$	(2,600	)		(30	)%

Selling, general and administrative expenses for ~~discontinued~~ continuing operations decreased by $0.5 million for the three months ended September 30, 2025, due primarily to non-cash stock compensation costs of approximately $2.01 million. Selling, general and administrative expenses for continuing operations decreased $51.7 0 million for the ~~three~~nine ~~and six~~ months, ~~respectively,~~ ended ~~June~~September 30, 2025 compared to the same period in 2024,. ~~due~~The tomajority ~~Solis~~of ~~being~~this ~~sold~~decrease onwas ~~October~~from 3a decrease in cash compensation costs, consulting expenses, insurance and the accounting and legal costs associated with audit preparation and Nasdaq listing costs during 2024 offset by the stock compensation costs during the period.

Selling, general and administrative expenses for discontinued operations decreased by $0.1 million and $1.5 million for the three and nine months, respectively, ended September 30, 2025 compared to the same period in 2024, due to Solis being sold on October 3, 2024.

Development Cost

The Company depends heavily on government policies that support our business and enhance the economic feasibility of developing and operating solar energy projects in regions in which we operate or plan to develop and operate renewable energy facilities. The Company can decide to abandon a project if there is material change in budgetary constraints, political factors or otherwise, governments from time to time may review their laws and policies that support renewable energy and consider actions that would make the laws and policies less conducive to the development and operation of renewable energy facilities. Any reductions or modifications to, or the elimination of, governmental incentives or policies that support renewable energy or the imposition of additional taxes or other assessments on renewable energy, could result in, among other items, the lack of a satisfactory market for the development and/or financing of new renewable energy projects, our abandoning the development of renewable energy projects, a loss of our investments in the projects, and reduced project returns, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Refer to Footnote 13 to the accompanying financial statements for more detail of development cost.

	Three Months Ended June 30,
	Three Months Ended September 30,
	2025		2024		Change ($)			Change (%)
					Change			Change
	2025		2024		($)			(%)
	(in thousands)
Development Cost	$	-	$	-741	$	(741	)		(100	)%
Total for continuing operations	$	-	$	-741	$	(741	)		(100	)%
Total for the period	$	-	$	-741	$	(741	)		(100	)%

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2025		2024		Change ($)			Change (%)
					Change			Change
	2025		2024		($)			(%)
	(in thousands)
Development Cost	$	-	$	7748	$	(7748	)		(100	)%
Total for continuing operations	$	-	$	7748	$	(7748	)		(100	)%
Total for the period	$	-	$	7748	$	(7748	)		(100	)%

47 55

~~There~~ ~~were no development costs for~~ ~~discontinued~~ Table ~~operations~~of ~~for~~Contents ~~the three and six months ended June 30, 2025.~~

There were no development costs for discontinued operations for the three and nine months ended September 30, 2025.

Depreciation, Amortization and Accretion Expense

Depreciation, amortization, and accretion expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 were as follows:

	Three Months Ended June 30,
	Three Months Ended September 30,
	2025		2024		Change ($)			Change (%)
					Change			Change
	2025		2024		($)			(%)
	(in thousands)
Depreciation, Amortization and Accretion expense	$	-	$	5052	$	(5052	)		(100	)%
Total for continuing operations	$	-	$	5052	$	(5052	)		(100	)%
Discontinued Operations:
Depreciation, Amortization and Accretion expense	$	-	$	~~493~~504	$	(~~493~~504	)		(100	)%
Total for discontinued operations	$	-	$	~~493~~504	$	(~~493~~504	)		(100	)%
Total for the period	$	-	$	~~543~~556	$	(~~543~~556	)		(100	)%

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2025		2024		Change ($)			Change (%)
					Change			Change
	2025		2024		($)			(%)
	(in thousands)
Depreciation, Amortization and Accretion expense	$	130	$	~~120~~175	$	10(45	)		8(26	)%
Total for continuing operations	$	130	$	~~120~~175	$	10(45	)		8(26	)%
Discontinued Operations:
Depreciation, Amortization and Accretion expense	$	-	$	~~991~~1,675	$	(~~991~~1,675	)		(100	)%
Total for discontinued operations	$	-	$	~~991~~1,675	$	(~~991~~1,675	)		(100	)%
Total for the period	$	130	$	1,~~111~~850	$	(~~981~~1,720	)		(8893	)%

Depreciation and amortization and accretion expense for continuing operations decreased by $50,000 and ~~increased~~decreased by $1045,000 for the three and ~~six~~ nine months, respectively, ended ~~June~~September 30, 2025 compared to the same period in 2024. This was primarily driven by the amortization for the intangible assets acquired in the Liion transaction December 2024, and the sale of the assets that related to the 2024 charge.

There was no depreciation, amortization and accretion expenses for discontinued operations throughout 2025 compared to the same period in 2024, due to all operating parks in Poland, the Netherlands and Romania being sold on January 19, 2024, February 21, 2024 and October 3, 2024, respectively.

Gain on Disposal of Assets

	Three Months Ended June 30,
	Three Months Ended September 30,
	2025		2024			Change ($)		Change (%)
						Change		Change
	2025		2024			($)		(%)
	(in thousands)
Gain on sale of continuing operations	$	~~11,924~~-	$	-		$	~~11,924~~-		(100	)%
Total for continuing operations		~~11,924~~-	$	-		$	~~11,924~~-		(100	)%
Discontinued Operations:
Gain on disposal of asset	$	-	$	-		$	-		-(100	)%
Costs related to disposal of asset		-		-(635	)	$	-635		-(100	)%
Total for discontinued operations	$	-	$	-(635	)	$	-635		-(100	)%
Total for the period	$	~~11,924~~-	$	-(635	)	$	~~11,924~~635		(100	)%

48 56

	Six Months Ended June 30,
	2025		2024			Change ($)			Change (%)
	(in thousands)
Gain on sale of continuing operations	$	15,513	$	-		$	15,513			100	%
Total for continuing operations		15,513		-			15,513			100	%
Discontinued Operations:
Gain on disposal of asset	$	-	$	3,374		$	(3,374	)		(100	)%
Costs related to disposal of asset		-		(1,200	)		(1,200	)		100	%
Total for discontinued operations	$	-	$	2,165		$	(2,165	)		(100	)%
Total for the period	$	15,513	$	2,165		$	13,348			616	%

Table of Contents

On April 29, 2025, the LiiON asset purchase agreement was rescinded, resulting in a disposal of assets. There were no costs incurred to complete the transaction. The Company recorded a loss of $33,700 in the income statement for the three months ended June 30 in relation to the transaction.

	Nine Months Ended September 30,
						Change			Change
	2025		2024			($)			(%)
	(in thousands)
Gain on sale of continuing operations	$	15,513	$	-			15,513			(100	)%
Total for continuing operations		15,513		-		$	15,513			(100	)%

Discontinued Operations:
Gain on disposal of asset	$	-	$	3,374		$	(3,374	)		(100	)%
Costs related to disposal of asset		-		(1,843	)	$	1,843			(100	)%
Total for discontinued operations	$	-	$	1,531		$	(1,531	)		(100	)%
Total for the period	$	15,513	$	1,531		$	13,982			913	%

On March 25, 2025, the Company sold its subsidiaries in Spain to AEG, a related party. There were no costs incurred to complete the transaction. As a result of the Transaction, the Company recorded a gain on the sale of $3.5 million and removed approximately $3 million in debt and payables related to MH02’s activities (See footnote 16).

On May 7, 2025, the Company sold AEG MH 02 Limited (“MH02”) and all its subsidiaries to third parties. There was no cost incurred to complete the sale. As a result of the Transaction, the Company recorded a gain on the sale of $11.9 million and removed approximately $18.3 million in debt and payables related to MH02’s activities (See Footnote 18).

On April 29, 2025, the LiiON asset purchase agreement was rescinded, resulting in a disposal of assets. The Company recorded a loss of $33,700 in the income statement for the three months ended June 30,2025 in relation to the transaction.

On March 25, 2025, the Company sold its subsidiaries in Spain to AEG, a related party. There were no costs incurred to complete the transaction. As a result of the Transaction, the Company recorded a gain on the sale of $3.5 million and removed approximately $3.6 million in debt and payables related to MH02’s activities (See footnote 17).

On January 19, 2024, the Company sold its operating parks in Poland with a carrying value of $55.2 million for $59.4 resulting in a $4.2 million gain partially offset by a $0.9 million loss on sale of assets in the Netherlands. $1.6M of the cash received was held back by the seller per the SPA and recorded as a receivable on the Consolidated Balance Sheet. On February 22, 2024, the Company sold its operating park in the Netherlands with a carrying value of $8.0 million for $7.1 million resulting in a $0.9 million loss. The costs incurred to complete the transaction totaled $1.2 million and are reported together with the disposal of the assets according to ASC 360-10-35-38.

Interest Expense, Other Income, and Other Expense

	Three Months Ended June 30,
	Three Months Ended September 30,
	2025			2024			Change ($)			Change (%)
							Change			Change
	2025			2024			($)			(%)
	(in thousands)
Interest expense	$	(~~1,250~~399	)	$	(~~809~~1,572	)	$	~~(441~~1,173	)		(5575	)%
Fair value movement on convertible note		(882	)		(182	)		(700	)		(100	)%
Fair value movement of convertible notes		(1,377	)		1,079			(2,456	)		(228	)%
Warrant issuance cost		(753	)		-			(753	)		(100	)%
Fair value movement of warrant derivative liability		(676	)		-			(676	)		100	%
Fair value movement on warrant		162			-			162			100	%
Gain on settlement of payables		426			-			426			100	%
Loss on issuance of debt		-			(948	)		948			100	%
Loss on settlement of liabilities		(151	)		-			(151	)		100	%
Other expense		(232	)		-			(278	)		(100	)%
Loss on settlement of SAA with Hover		(2,025	)		-			(2,025	)		100	%
Other income		(46	)		3			(3	)		(100	)%
Loss on issuance of debt		(19	)		-			(19	)		100	%
Total for continuing operations	$	(3,001	)	$	(1,936	)	$	1,065			55	%
Loss on extinguishment of debt		(3,404	)		-			(3,404	)		100	%
Provision for loss from related party		(1,139	)		-			(1,139	)		100	%
Other income		-			64
Total for continuing operations	$	(8,765	)	$	(429	)	$	(8,336	)		1,943	%
Discontinued Operations:
Interest income/(expense)	$	-		$	(23,~~006~~428	)	$	23,~~006~~428			(100	)%
Other expense		-			-			-			-100	%
Total for discontinued operations	$	-		$	(23,~~006~~428	)	$	23,~~006~~428			(100	)%
Total for the period	$	(38,~~001~~765	)	$	(53,~~242~~857	)	$	(24,~~241~~908	)		43127	%

49 57

	Six Months Ended June 30,
	2025			2024			Change ($)			Change (%)
	(in thousands)
Net interest expense	$	(3,440	)	$	(2,264	)	$	(1,181	)		(53	)%
Loss on debt issuance		-			(948	)		948			100	%
Fair value movement on FPA asset		-			(483	)		483			100	%
Gain on extinguishment of debt		-			179			(179	)		(100	)%
Fair value movement on convertible note and warrant		(887	)		(182	)		(705	)		(387	)%
Warrant issuance cost		(753	)		-			(753	)		(100	)%
Fair value movement on warrant		162			5			157			3,140	%
Other expense		(232	)		(231	)		(1	)		(0	)%
Other income		-			7			(7	)		100	%
Total for continuing operations	$	(5,150	)	$	(3,917	)	$	(1,233	)		(31	)%
Discontinued Operations:
Interest income/(expense)	$	-		$	(6,807	)	$	6,807			100	%
Other expense		-			-			-			-	%
Total for discontinued operations	$	-		$	(6,807	)	$	6,807			(100	)%
Total for the period	$	(5,150	)	$	(10,724	)	$	5,574			52	%

Table of Contents

Total interest expense, other income, and other expense for continuing operations decreased by approximately $0.2 million for the three months and increased $1.0 million for six months, respectively, ended June 30, 2025 compared to the same period in 2024. The primary drivers was a net increase of $1.0 million in interest expense for the six months, as shown below.

	Nine Months Ended September 30,
							Change			Change
	2025			2024			($)			(%)
	(in thousands)
Interest expense	$	(3,839	)	$	(4,854	)		1,015			(21	)%
Fair value movement of FPA Asset		-			(483	)		483			(100	)%
Fair value movement of convertible notes		(2,263	)		898			(3,161	)		(352	)%
Debt restructuring costs		(753	)		-			(753	)		100	%
Fair value movement of warrant derivative liability		(514	)		-			(514	)		100	%
Gain on settlement of payables		426			-			426			100	%
Loss on settlement of liabilities		(151	)		-			(151	)		100	%
Loss on settlement of SAA with Hover		(2,025	)		-			(2,025	)		100	%
Loss on issuance of debt		(19	)		(948	)		929			(98	)%
Loss on extinguishment of debt		(3,404	)		179			(3,583	)		(2002	)%
Provision for loss from related party		(1,139	)		-			(1,139	)		100	%
Other expense		(232	)		(8	)		(232	)		100	%
Other income		-			67			(67	)		(100	)%
Total for continuing operations	$	(13,914	)	$	(5,149	)	$	(8,765	)		170	%

Discontinued Operations:
Interest income/(expense)	$	-		$	(9,213	)	$	9,213			(100	)%

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