Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 505

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1A
Chunk 505
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 and finance
    departments were not consistently provided the complete and adequate support, documentation, and information including the nature
    of relationships with certain counterparties to record transactions within the financial statements timely, completely and accurately.

The accounting group has implemented
a monthly review with the appropriate responsible parties within the Company, to review and confirm that the accounting department has
received the proper documentation for various transactions.

    ●
    The Company did not design
    and maintain effective controls for transactions between related parties and affiliates recorded between itself, the parent company
    and its subsidiaries. Specifically, the accounting and finance departments lacked formalized documentation establishing intercompany
    due to/from balances and did not periodically assess the collectability of such outstanding balances.

69

As part of the new despac structure,
the Company is in the process of formalizing documentation related to intercompany due to/from within the new organization structure,
and with Alternus Energy, Inc, which is a related party.

    ●
    The Company did not design
    and maintain effective controls to address the identification of and accounting for certain non-routine, unusual or complex transactions,
    including the proper application of U.S. GAAP to such transactions. Specifically, the Company did not design and maintain controls
    to timely identify and account for warrant instruments related to certain promissory notes, forward purchase agreements, debt modifications,
    and impairment of discontinued operations.

The Company will have third party
experts review non routine, unusual and complex transactions in order to have the required expertise to confirm the proper accounting
treatment.

    ●
    The Company did not design
    and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting
    and disclosures, including controls over the period-end financial reporting process addressing areas including financial statement
    and footnote presentation and disclosures, account reconciliations and journal entries, including segregation of duties, assessing
    the reliability of reports and spreadsheets used in controls, and the timely identification and accounting for cut-off of expenditures.

The Company is working with an external
consultant to review and assess the Company’s current internal control structure to improve the overall effectiveness of the control
environment. In addition, the Company is investing in third party software to improve the accuracy, review, and approval of account reconciliations
and other accounting functions. Also, the Company is investing in third party software to improve the process around the completion of
the financial statements.

The material weaknesses described
above could result in a material