Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 146

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1
Chunk 146
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 taken or expected to be taken in a tax return and the benefit recognized and
measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized for an unrecognized
tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was
not recognized as a result of applying the provisions of ASC 740.

As a result of the Tax Cuts
and Jobs Act (TCJA) of 2017, the Company analyzed if a liability needed to be recorded for the deemed repatriation of undistributed earnings.
It was determined that there is no outstanding liability associated with this based on overall negative undistributed earnings (accumulated
deficit) in the consolidated foreign group. An additional provision of the TCJA is the implementation of the Global Intangible-Low Taxed
Income Tax, or “GILTI.” The Company has elected to account for the impact of GILTI in the period in which the tax applies
to the Company.

Penalties and interest assessed by income tax authorities would be
included in income tax expense. The company incurred penalties of $0.2 million and $0.4 million for the period ended December 31, 2024
and 2023, respectively.

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