Company: ALCE
Filing Date: 2025-11-03
Form Type: 10-Q
Source: 0001213900-25-105077
Chunk: 158

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-11-03
Form: 10-Q
Item: Part I, Item 8
Chunk 158
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 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 170,000 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.

11

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 L