Financial Analysis

"15. 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. From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Companys business. Other than the following matters, we are not aware of any such legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results. On October 15, 2024 Sunrise requested a hearing be scheduled in binding arbitration against the Company, two of its former indirect wholly owned subsidiaries, ALT US 03 and ALT US 04, and AEG, to be conducted in Minneapolis, MN in accordance with the Commercial Arbitration Rules of the American Arbitration Asso …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"12. Convertible Debt and Non-convertible Promissory Notes Convertible notes measured at fair value The following table reflects the Company's convertible notes measured at fair value under the ASC 825 fair value option (""FVO"") election as of December 31, 2025 and December 31, 2024. 2024 OID Convertible Convertible Notes Notes Total (in thousands) Balance at December 31, 2024 $ 1,702 $ - 1,702 Reclass of accrued interest to convertible note 471 - 471 Conversions (2,336 ) - (2,336 ) Notes reclassified upon reevaluation of embedded features - 1,975 1,975 Loss from extinguishment of debt - 3,187 3,187 New convertible notes issued at fair value - 935 935 Movement in fair value 728 3,239 3,967 Balance at December 31, 2025 $ 565 $ 9,336 $ 9,900 April and October 2024 Convertible Promissory Notes (the ""2024 Convertible 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 Companys common stock at an exercise price of $2,400 per share. This warrant was adjusted on November 12, 2024, December 5, 2024 and September 2025, and as a result, the warrant has been adjusted to purchase up to 1,360,755 shares of the Companys 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 com …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Year Ended December 31, Revenue by Country 2025 2024 (in thousands) United States - 311 Total for continuing operations $ - $ 311 Discontinued Operations: Netherlands $ - $ 16 Poland - 106 Romania - 9,687 Total for discontinued operations $ - $ 9,809 Total for the period $ - $ 10,120 Year Ended December 31, Revenue by Offtake Type 2025 2024 (in thousands) Country Renewable Programs $ - $ 311 Total for continuing operations $ - $ 311 Discontinued Operations: Country Renewable Programs $ - $ 334 Green Certificates - 5,803 Energy Offtake Agreements - 3,638 Other Revenue - 34 Total for discontinued operations $ - $ 9,809 Total for the period $ - $ 10,120

DisaggregationOfRevenueTableTextBlock

"22. Income Tax Provision Year Ended December 31, Major Components of Tax Expense/(Income) 2025 2024 (in thousands) Current tax expense - continuing operations $ - $ 590 Current tax expense - discontinued operations 87 Actual income tax expense (benefit) $ - $ 677 An explanation of the relationship between tax expense and accounting profit for continuing operations before the adoption of ASU 2023 - 09 for the tax year ended December 31, 2024 is as follows: Year Ended December 31, 2025 2024 (in thousands) Accounting profit before tax $ - $ 21,756 Tax at the applicable rate of 21 % - 4,569 State income taxes, net of federal benefit - (710 ) Permanent items - 380 Tax effect of differences in foreign tax rates - (4,747 ) Other - 1,311 Change in valuation allowance - (213 ) Actual income tax expense/(benefit) - continuing operations $ - $ 590 Discontinued operations $ $ 87 As of December 31, 2025, the Company has adopted ASU 2023 - 09 prospectively. An explanation of the relationship between tax expense and accounting profit after the adoption of ASU 2023 - 09 for the tax year ended December 31, 2025 is as follows: Year Ended December 31, 2025 (in thousands) US Federal Statutory Rate $ (1,362 ) 21.0 % State income taxes, net of federal benefit - 0.0 % Foreign tax effects Ireland Debt Cancellation Income related to loan not historically deducted (1,932 ) 29.8 % Differences in statutory tax rates between US and Ireland (1,168 ) 18.0 % True up of DTA due to disposal of subsidiaries 4 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

14. Leases The Company determines if an arrangement is a lease or contains a lease at inception or acquisition when the Company acquires a new park. Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As most of the Companys leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. Lease expense related to the net present value of payments is recognized on a straight-line basis over the lease term. The key components of the companys operating leases were as follows (in thousands): December 31, December 31, 2025 2024 Operating Lease - Operating Cash Flows (Fixed Payments) - - Operating Lease - Operating Cash Flows (Liability Reduction) - 43 New ROU Assets - Operating Leases - - Weighted Average Lease Term - Operating Leases (years) - 34.05 Weighted Average Discount Rate - Operating Leases % 9.3 % During the year 2024, the Companys operating leases generally relate to the rent of office building space, as well as land and rooftops upon which the Companys solar parks are built. These leases included those that had been assumed in connection with the Companys asset acquisitions and business combinations. The Companys leases were for varying terms and had expiration between 2027 and 2055. In October 2023, the Company ente …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Issued Not Yet Effective Accounting Standards In October 2023, the FASB issued ASU 2023 - 06, Disclosure Improvements: Codification Amendments in Response to the SEC s Disclosure Update and Simplification Initiative . For SEC registrants, the effective date for each amendment will be the date on which the SECs removal of the related disclosure requirement from Regulation S- X or Regulation S-K becomes effective. If the SEC has not removed the applicable requirement by June 30, 2027, the related amendment will not become effective. The Company is currently evaluating the impact of this guidance on its disclosures. 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 Co …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

23. Related Party The following is a summary of transactions since January 1, 2024 to which we have been a party, in which the amount involved exceeded $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest other than compensation and other arrangements that are described the sections titled Executive Compensation and Non-Employee Director Compensation. We also describe below certain other transactions with our directors, former directors, executive officers and stockholders. AEG: Alternus Energy Group Plc (AEG) was an 48% shareholder of the Company as of December 31, 2024 . As of December 31, 2025 , AEG was a 14.69% shareholder of the Company. 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 Companys restricted common stock. During the period ended December 31, 2025, the Company and its subsidiaries, and AEG and its subsidiaries had numerous financial transactions between each other which were approved by the unconflicted members of each companys board of directors. Two of our Company's board members, Mr. Vincent Browne and Mr. John Thomas, are also boar …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

21. 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 Companys 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. European operations represent our most significant business. The Chief Operating Decision-Maker (CODM) is the CEO. Historically, the European Segment derives revenues from three sources, Country Renewable Programs, Green Certificates and Long-term Offtake Agreements. The United States Segment revenues are derived from Long-term Offtake Agreements. As of December 31, 2024, the Company had no revenue from discontinued operations as the operating parks in Poland, the Netherlands, and Romania were sold. Additionally, the Company had no revenue continuing operations as the Lightwave operating parks were sold back to the parent company, AEG, as a result of the deconsolidation of Alternus Energy Americas Inc. on November 5, 2024. In evaluating financial performance, the CODM uses Adjusted EBITDA to assess segment performance …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"3. Summary of Significant Accounting Policies Basis of Presentation The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP). Basis of Consolidation The consolidated financial statements include the financial statements of the Company, its wholly owned and majority-owned subsidiaries and entities consolidated as variable interest entities (""VIEs"") for which the Company has been determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated financial statements from the effective date of acquisition or up to the effective date of disposal, as appropriate. Variable Interest Entities (""VIEs"") For VIEs, the Company assesses whether it is the primary beneficiary as prescribed by the accounting guidance on the consolidation of a VIE. The Company evaluates its business relationships with related parties to identify potential VIEs under Accounting Standards Codification (""ASC"") 810, Consolidation . The Company consolidates VIEs in which it is considered to be the primary beneficiary. Entities are considered to be the primary beneficiary if they have both of the following characteristics: (i) the power to direct the activities that, when taken together, most significantly impact the VIE's performance; a …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"20. Shareholders Equity Common Stock As of December 31, 2024 , the Company had a total of 300 million shares of common stock authorized with 25,189 shares issued and outstanding. As of December 31, 2025 , the Company had a total of te shares of common stock authorized with 724,658 shares issued and outstanding. Reverse Stock Split On October 11, 2024, the Company effected a one -for-25 ( 1:25 ) reverse stock split of all issued and outstanding shares of the Companys common stock, par value $0.0001 per share (the Common Stock) effective as of 12:01 a.m. Eastern Time on October 11, 2024 ( the 2024 Reverse Stock Split), vide a Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of Alternus Clean Energy, Inc. (the Certificate of Amendment) filed with the Secretary of State of Delaware on October 3, 2024, and deemed effective on October 11, 2024 at 12:01 a.m. Eastern Time. 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 nonassessable share of Common Stock. The Reverse Stock Split uniformly affected all issued and outstanding shares of Common Stock and did not alter any stockholders percentage ownership interest in the Company, except to the extent that the 2024 Reverse Stock Split results in the fractional interests. No fractional shares will be or shall be issued in connection with the 2024 Reverse Stock Split. Stockhol …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

"24. Subsequent Events Management has evaluated subsequent events that have occurred through the date the financial statements were issued and has determined that there were no subsequent events that required recognition or disclosure in the financial statements as of and for the year ended December 31, 2025 , except as disclosed below. Promissory Note Extensions and Settlement of Debt: The $1,250,000 promissory note issued in December of 2024, the $312,500 note issued in May of 2025, the $312,500 note issued in September of 2025 and the $250,000 note issued in November of 2025 to SNC were each extended on a monthly basis and the original issue discount (OID) increased by 5% each month. On March 31, 2026 the Company settled with SNC pursuant to which the Company issued 7,583 shares of Series D Convertible Preferred Stock as total repayment for, and the replacement and cancellation of, all of SNC's outstanding promissory notes. The Company expects to recognize a gain or loss on settlement of the SNC Notes, in its consolidated financial statements for the period ending March 31, 2026, upon completion of a third party valuation of the Series D Convertible Preferred Stock. 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 …

SubsequentEventsTextBlock · excerpt; the full note is in the filing

"12. 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. From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Companys business. Other than the following matters, we are not aware of any such legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results. On October 15, 2024 Sunrise requested a hearing be scheduled in binding arbitration against the Company, two of its former indirect wholly owned subsidiaries, ALT US 03 and ALT US 04, and AEG, to be conducted in Minneapolis, MN in accordance with the Commercial Arbitration Rules of the American Arbitration Asso …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"10. Convertible and Non-convertible Promissory Notes Convertible notes measured at fair value The following table reflects the Company's convertible notes measured at fair value under the ASC 825 fair value option (""FVO"") election as of March 31, 2026 and December 31, 2025 Convertible OID Notes Convertible April 2024 Notes Total (in thousands) Balance at December 31, 2025 $ 565 9,335 9,900 Movement in fair value 67 2,296 2,363 Series D Convertible Preferred shares issued for debt - (5,755 ) (5,755 ) Series E Convertible Preferred shares issued for debt - (519 ) (519 ) Gain on settlement of debt - (5,257 ) (5,257 ) Balance at March 31, 2026 $ 632 $ 100 $ 732 April and October 2024 Convertible Promissory Notes. The Company previously issued senior convertible promissory notes in April 2024 and October 2024 ( collectively, the ""2024 Convertible Notes""). The terms of the 2024 Convertible Notes, together with significant conversion features, are described in Note 10 to the Company's audited consolidated financial statements included in its Annual Report on Form 10 -K for the year ended December 31, 2025. The aggregate amount outstanding under the 2024 Convertible Notes as of March 31, 2026 and December 31, 2025 was approximately $0.8 million and $0.8 million, respectively. The notes continue to bear interest at 12% in accordance with their contractual terms. There were no conversions of the 2024 Convertible Notes during the three months ended March 31, 2026. Conversions durin …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

16. Income Tax Provision The Companys provision for income taxes for interim periods is determined using its effective tax rate expected to be applied for the full year. The Companys effective tax rate was 0.0% for the three months ended March 31, 2026 , 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 entitys 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. …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recently Issued Not Yet Effective Accounting Standards In October 2023, the FASB issued ASU 2023 - 06, Disclosure Improvements: Codification Amendments in Response to the SEC s Disclosure Update and Simplification Initiative . For SEC registrants, the effective date for each amendment will be the date on which the SECs removal of the related disclosure requirement from Regulation S- X or Regulation S-K becomes effective. If the SEC has not removed the applicable requirement by June 30, 2027, the related amendment will not become effective. The Company is currently evaluating the impact of this guidance on its disclosures. 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 …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

17. Related Party The following is a summary of transactions since January 1, 2025 to which we have been a party, in which the amount involved exceeded $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest other than compensation and other arrangements that are described the sections titled Executive Compensation and Non-Employee Director Compensation. We also describe below certain other transactions with our directors, former directors, executive officers and stockholders. AEG : Alternus Energy Group Plc (AEG) was a 14.7% shareholder as of December 31, 2025 and March 31, 2026. During the period ended March 31, 2025, the Company and its subsidiaries and AEG and its subsidiaries had numerous financial transactions between each other which were approved by each companys board of directors. These transactions are recorded as a net liability of $0.3 million on the Consolidated Balance Sheet. Two of our Company's board members, Mr. Vincent Browne and Mr. John Thomas, are also board members of AEG. Specifically during the three month period ended March 31, 2025, the Company issued 3,239 shares to AEG and its affiliates having a fair value of $0.4 million at time of issuance. Hover: On September 30, 2025 we entered into a joint venture operating agreement with Hover Energy LLC (Hover) pursuant to which Alternus sold a …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

15. Segment and Geographic Information The Company has two reportable segments that consist of operations segmented by geographical region, United States Operations and European Operations. The Chief Operating Decision-Maker (CODM) is the CEO. In evaluating financial performance, the CODM uses Adjusted EBITDA to assess segment performance and decide how to allocate resources. Adjusted EBITDA is defined as earnings before interest expense, income tax expense, depreciation and amortization, and any one time non-operational costs or costs related to financing or capital transactions. The Company uses Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Companys earnings from operations. Adjusted EBITDA is not a measure of the Companys 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. The Company evaluates many of our capital expenditure decisions at a regional level. Accordingly, expenditures on property, plant and equipment and associated debt by segment are presented. The following tables present information related to the Companys reportable segments. The data has been presented to show the effect of discontinued operations for subsidiaries sold or deconsolidated. Three Months Ended March 31, Net Income/(loss) by Segment 2026 2025 (in thousands) Europe $ (245 ) $ 2,809 United States (648 ) (2,989 ) Total for the per …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"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 8 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 Companys Annual Report on Form 10 -K for the year ended December 31, 2025 as filed on June 15, 2026. Basis of Consolidation The consolidated financial statements include the financial statements of the Company, its wholly owned and majority-owned subsidiaries and entities consolidated as variable interest entities (""VIEs"") for which the Company has been determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated financial statements from the effective date of acquisition or up to the effective date of disposal, as appropriate. Variable Interest …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"14. Shareholders Equity Common Stock As of March 31, 2026 and December 31, 2025 the Company had a total of 2 billion shares of common stock authorized with 724,658 common shares issued and outstanding. Reverse Stock Splits 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 Companys 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 stockholders 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 Stoc …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

18. 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 March 31, 2026 , except as disclosed below. On April 21, 2026, the Company closed an additional EUR200,000 (approximately $235,000) investment pursuant to the terms of the private placement 20% OID secured promissory notes offering that closed on March 3, 2026, and issued 240 shares of Series C, valued at $709.00 per share, and issued a EUR250,000 (approximately $293,000) Note to the accredited investor. In June of 2026, the Company received the remaining $200,000 due pursuant to the March 3, 2026 private placement offering. On June 16, 2026, the Company's Board of Directors and Vincent Browne, as the stockholder holding a majority of the voting stock, approved an amendment to our Certificate of Incorporation to change our corporate name to Aedis Energy Inc. This name change is in process and has not gone effective as of the date of this Quarterly Report. Management entered into a term sheet on June 3, 2026 with institutional investors providing for two tranches of preferred equity financing of up to $20.0 million before transaction costs. Funding of each tranche remains subject to various conditions precedent, including receipt of certain governmental and regulatory approvals that are outside …

SubsequentEventsTextBlock · excerpt; the full note is in the filing