Alternus Clean Energy(ALCE) - 2024 Q4 - Annual Report

Business Combination and Acquisitions - The company completed a business combination with Alternus Energy Group Plc on December 22, 2023, issuing 2,300,000 shares of common stock [272]. - The company aims to expand its portfolio by acquiring utility-scale clean energy projects across multiple geographies, enhancing long-term recurring revenue and cash flow [288]. - The Company entered into an asset purchase agreement with LiiON LLC for the acquisition of certain assets related to LiiON's Battery Storage Business, although the agreement was later rescinded [323][324]. Financial Performance - Revenue for the year ended December 31, 2024, was $10.12 million, a decrease of$20.4 million (67%) compared to $30.52 million in 2023 [312]. - The Company reported a net income of$21.08 million for the year ended December 31, 2024, compared to a net loss of $69.46 million in 2023 [310]. - The total megawatt hours (MWh) sold for the year ended December 31, 2024, was 48,247 MWh, down from 165,463 MWh in 2023, reflecting a decrease of 70$16.57 million in 2024 from $13.77 million in 2023, primarily due to impairment losses and increased administrative costs [310]. - Revenues from the United States increased by 168$311,000 in 2024, while revenues from Italy dropped to zero from $3.36 million in 2023 [312]. - The Company experienced a significant decrease in revenues from discontinued operations, totaling$9.81 million in 2024, down 64% from $27.04 million in 2023 [312]. - The Company’s cost of revenues for the year ended December 31, 2024, was$4.52 million, a decrease of 48% from $8.69 million in 2023 [316]. Operational Challenges - The company operates with a working capital deficiency and negative equity, raising concerns about its ability to continue as a going concern without planned financing [275]. - The company expects inflation and energy rate fluctuations to significantly impact its results of operations [290]. - The Company is currently addressing going concern issues and working with global banks to secure project financing [353]. Strategic Focus and Growth - The company is focused on forming strategic partnerships and pursuing acquisitions in high-growth areas like battery storage to diversify revenue streams [285]. - The company’s growth strategy includes optimizing financing sources to support long-term growth and profitability in a cost-efficient manner [295]. Debt and Financing - The company has a project-level debt comprising 62.2$30.344 million, down from $32.312 million in 2023 [348]. - Cash and cash equivalents decreased to$161,000 as of December 31, 2024, from $4.042 million in 2023 [348]. - The Company eliminated approximately$115 million in debt related to Solis activities following its sale on October 3, 2024 [350]. - The Company issued a senior convertible note of $2,160,000 with an 8$2,000,000 [359]. - The Company entered into a Purchase Agreement for senior convertible notes totaling up to $2,500,000, with a 12$700,000 [360]. Cash Flow and Expenses - The net cash used in operating activities for the year ended December 31, 2024 was $(3,222) thousand, a decrease of$6,261 thousand compared to 2023 [372]. - Net cash provided by discontinued operating activities increased by $85.4 million, primarily due to a gain of$55.0 million from the sale of operating parks [374]. - Net cash used in investing activities increased by $1.0 million, attributed to costs for construction parks and project development [375]. - Net cash provided by financing activities decreased by$19.9 million, mainly due to a net decrease of $13.8 million in new debt [377]. - The Company incurred operating lease expenses of$126 thousand for the United States office lease and $48 thousand for the land lease in Madrid, Spain for the year ended December 31, 2024 [369]. Impairment and Losses - Impairment loss recognized for continuing operations increased by$3.3 million for the year ended December 31, 2024, reflecting expected loss on the disposal of Spanish assets [342]. - Net loss for continuing operations decreased by $7.9 million for the year ended December 31, 2024, attributed to a decrease in cost of revenues and other expenses [344]. - Net loss for discontinued operations decreased by$82.7 million for the year ended December 31, 2024, primarily due to a gain of $53.0 million from the sale of operating parks [345]. Currency and Interest Rate Risks - The company is exposed to foreign currency risk due to transactions and borrowings in foreign currencies, impacting its financial statements when translated into U.S. dollars [387]. - The company manages currency risk by transacting in currencies where it incurs operating expenses and matching borrowings to expected operational currency generation [388]. - Interest rate risk arises from fluctuations in interest rates affecting the value of investments and financing activities, with the company monitoring the ratio of fixed and floating rate instruments [390]. - The company believes its interest rates on borrowings are favorable compared to market rates [391]. Company Classification - The company qualifies as an "emerging growth company" and has elected to use the extended transition period for new accounting standards [392]. - The company expects to remain an emerging growth company until it exceeds$1.235 billion in annual revenue or meets other specified criteria [393]. - The company is classified as a "smaller reporting company" and will maintain this status until certain market value and revenue thresholds are met [394].