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Power & Digital Infrastructure Acquisition II (XPDB) - 2024 Q4 - Annual Report

AirJoule Technology and Market Potential - The AirJoule system is expected to produce 1,000 liters of distilled water per day by 2025, with commercial sales scaling in 2026 [22]. - The total addressable market for AirJoule's solutions is estimated to be approximately $450 billion, targeting water, dehumidified air, and cooling demands [40]. - AirJoule technology can reduce energy consumption in HVAC systems by up to 50%, significantly lowering operating costs [37]. - The proprietary MOF used in AirJoule can adsorb more than 50% of its weight in water vapor, enhancing water harvesting efficiency [25]. - The integration of low-grade waste heat in AirJoule systems can reduce energy requirements to below 130 Wh/L for water production [28]. - The global HVAC system market is projected to grow from approximately $214 billion in 2022 to $358 billion by 2032, at a CAGR of 5.27% [37]. - The data center market is projected to grow at a compound annual growth rate of 11.7% from 2024 to 2034, driving demand for innovative cooling solutions [62]. - The company holds foundational patents in atmospheric water harvesting, positioning it to capture growth in this rapidly developing sector [59]. Partnerships and Collaborations - Strategic partnerships with GE Vernova and Carrier are aimed at accelerating commercialization and scaling manufacturing capabilities [42]. - The company has secured an exclusive worldwide license from PNNL for self-regenerating dehumidifier technology, enhancing its competitive edge [47]. - BASF is positioned to scale production of the proprietary MOF materials for mass production, supporting AirJoule's manufacturing needs [48]. - The company has entered into a Joint Development Agreement with BASF for the exclusive supply of MOF materials for a term of three years, ending on September 27, 2025 [49]. - A joint venture with CATL, CAMT Climate Solutions Ltd., was formed, with both parties owning 50% and contributing $6.0 million each, although no funding has occurred as of December 31, 2024 [51]. - The partnership with Carrier grants exclusive rights to commercialize AirJoule technology in HVAC applications in the Americas for three years post-commercialization [72]. - The company is currently in a joint venture with CATL and a development agreement with BASF, indicating a focus on partnerships for technology development [134]. Financial Performance and Projections - As of December 31, 2024, the company incurred a net loss of $215.7 million, compared to a loss of $11.4 million for the year ended December 31, 2023 [91]. - The company reported a net income of $215.7 million for the year ended December 31, 2024, compared to a net loss of $11.4 million in 2023, reflecting a positive change of $227.1 million [215]. - General and administrative expenses increased to $9.0 million in 2024 from $7.5 million in 2023, an increase of $1.5 million [216]. - Research and development expenses decreased to $2.0 million in 2024 from $3.3 million in 2023, a decrease of $1.3 million [217]. - The company recognized a gain of $333.5 million on the contribution to AirJoule, LLC, reflecting the fair value of the intellectual property transferred [222]. - The company incurred transaction costs of approximately $54.7 million related to the business combination [215]. - The company reported a loss of $5.3 million from its 50% equity investment in the AirJoule joint venture for the year ended December 31, 2024 [224]. Risks and Challenges - The company faces significant risks related to project execution, including potential cost overruns and delays, which could adversely affect profitability [97]. - The company may require additional financing to support its operations and expansion plans, as it has limited capital resources [98][99]. - The company operates in a highly fragmented market for atmospheric water harvesting, where existing technologies are energy-intensive and less cost-efficient [79][80]. - The company is subject to risks associated with rapid technological changes and may face competitive disadvantages if unable to adapt effectively [102]. - Significant capital is required for the development and commercialization of AirJoule units, which may impact profitability if costs exceed estimates [103]. - Actual operating costs for manufacturing and distributing AirJoule units may be significantly higher than anticipated, affecting financing ability and profitability [104]. - The company faces increasing competition from established firms with greater resources, which could negatively impact market share and pricing [105]. - The reliance on joint ventures, such as with GE Vernova, may pose risks if partners do not fulfill funding obligations or make adverse business changes [117][118]. - The company may incur impairment charges related to its equity method investment in the AirJoule joint venture, potentially affecting financial condition [119][120]. - Supply chain risks exist due to reliance on sole-source suppliers for key components, which could disrupt production and increase costs [123][124]. - The company anticipates increased scrutiny and regulation regarding ESG matters, which could lead to reputational harm and increased compliance costs [115][116]. - The ability to attract and retain key personnel is critical for growth, and challenges in the labor market could adversely affect operations [108]. - The accuracy of total addressable market estimates is crucial, as inaccuracies could limit future growth potential [110]. - The company may face supply chain competition, potentially leading to insufficient inventory and negatively impacting operational results [125]. - Manufacturing issues not identified prior to design finalization could impact deployment costs and schedules, affecting the commercialization of AirJoule units [126]. - The company expects to depend on a limited number of customers for a substantial portion of future revenue, which poses a risk if significant customers are lost [129]. - Regulatory risks include the need for numerous permits and compliance with environmental, health, and safety laws, which could increase operating costs [138]. - The company anticipates that a strengthening U.S. dollar could increase the real cost of AirJoule units for international customers, adversely affecting operating results [144]. - Noncompliance with anti-corruption and anti-bribery laws could lead to significant fines and reputational harm, impacting business operations [145]. - The company is subject to risks associated with operating in foreign countries, including economic instability and changes in local regulations [133]. - The company may experience delays in production and delivery due to regulatory challenges and the need for necessary approvals [142]. - Trade wars and tariffs could materially affect the company's ability to obtain key components and increase operational costs [140]. - CFIUS has the authority to review foreign investments in U.S. businesses for national security concerns, which could impact business operations [148]. - CFIUS actions may include suspending transactions or imposing mitigation measures if national security concerns are identified [148]. - Changes in laws and regulations, including tax laws, could adversely affect the company's business and financial condition [151][152]. - The company may face challenges in protecting its intellectual property rights, which could undermine its competitive position [156][161]. - The company relies on licenses for third-party intellectual property, and disputes could lead to additional costs or limitations on operations [166]. - Geopolitical tensions and force majeure events could disrupt supply chains and impact business operations [154][155]. - The company has entered into commercial arrangements with foreign partners, which may be subject to CFIUS review [150]. - Compliance with SEC and Nasdaq regulations is required, and failure to comply could have material adverse effects [151]. - The company may incur substantial costs defending against intellectual property claims from third parties [164]. - The effectiveness of patent protection may vary by jurisdiction, impacting the company's ability to enforce its rights internationally [162][163]. Corporate Governance and Stock Information - As of December 31, 2024, executive officers, directors, and their affiliates owned approximately 58.0% of the outstanding common stock, allowing them significant control over corporate decisions [169]. - The company does not intend to pay dividends on its common stock for the foreseeable future, opting to retain earnings for business development [171]. - The board of directors has not declared any dividends to date and does not anticipate doing so in the foreseeable future [193]. - The company may face risks from future sales of common stock or other equity dilution, which could adversely affect the market price of its common stock [170]. - The company commenced trading on Nasdaq under the symbols "AIRJ" and "AIRJW" on March 15, 2024, with 81 stockholders of record as of March 1, 2025 [192]. - The company has not authorized any securities for issuance under equity compensation plans [194]. - The company issued 588,235 shares of Class A common stock at a price of $8.50 per share, raising gross proceeds of $5.0 million in March 2024 [197]. - In June 2024, the company entered into subscription agreements to issue 1,238,500 shares of Class A common stock for approximately $12.4 million [198]. - Material weaknesses in internal control over financial reporting were identified, which could adversely affect investor confidence and the market price of the common stock [172]. - The company qualifies as an "emerging growth company," allowing it to rely on reduced public company reporting requirements, which may affect the attractiveness of its common stock to investors [180]. - Cybersecurity risks are regularly assessed, and the company has implemented controls to protect its information systems [184]. - The company is not currently involved in any legal proceedings that would materially affect its business or financial condition [189].