Montana Technologies Corporation(AIRJ) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and related disclosures for the reporting period Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents unaudited consolidated financial statements and notes for Q2 2025 and FY 2024 Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity Condensed Consolidated Balance Sheets (Selected Items) | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------------- | :------------ | :---------------- | | Cash, cash equivalents and restricted cash | $30,502,711 | $28,021,748 | | Total current assets | $32,016,616 | $31,455,631 | | Investment in AirJoule, LLC | $343,858,688 | $338,178,633 | | Total assets | $376,084,893 | $369,852,120 | | Total current liabilities | $2,526,679 | $4,018,747 | | Earnout Shares liability | $5,416,000 | $24,524,000 | | Subject Vesting Shares liability | $1,411,000 | $7,819,000 | | Total liabilities | $87,515,300 | $117,741,796 | | Total stockholders' equity | $288,569,593 | $252,110,324 | Condensed Consolidated Statements of Operations Details the company's financial performance, including revenues and expenses Condensed Consolidated Statements of Operations (Selected Items) | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $3,751,211 | $3,211,205 | $6,537,695 | $4,024,444 | | Research and development | $401,623 | $1,050,804 | $789,542 | $1,896,961 | | Loss from operations | $(4,162,917) | $(4,338,066) | $(7,353,117) | $(60,729,375) | | Gain on contribution to AirJoule, LLC | — | — | — | $333,500,000 | | Equity loss from investment in AirJoule, LLC | $(2,089,667) | $(580,788) | $(4,319,945) | $(607,170) | | Change in fair value of Earnout Shares liability | $6,276,000 | $13,064,000 | $19,108,000 | $5,392,000 | | Net income | $2,513,213 | $13,429,895 | $17,391,871 | $194,985,187 | | Basic net income per share, Class A common stock | $0.04 | $0.25 | $0.30 | $4.05 | | Diluted net income per share, Class A common stock | $0.04 | $0.24 | $0.30 | $3.92 | Condensed Consolidated Statements of Changes in Members' and Stockholders' Equity (Deficit) Outlines changes in the company's equity for the reporting periods Changes in Stockholders' Equity (Selected Items) - Six Months Ended June 30, 2025 | Item | Class A Common Stock (Shares) | Class A Common Stock (Amount ($)) | Additional Paid-In Capital ($) | Retained Earnings ($) | Total Stockholders' Equity ($) | | :-------------------------- | :---------------------------- | :---------------------------- | :------------------------- | :---------------- | :------------------------- | | Balance at December 31, 2024 | 55,928,661 | $5,593 | $53,577,270 | $198,527,461 | $252,110,324 | | Exercise of options | 296,065 | $29 | $99,688 | — | $99,717 | | Share-based compensation | — | — | $2,641,056 | — | $2,641,056 | | Issuance of True up Shares | 275,880 | $28 | $2,082,866 | — | $2,082,894 | | PIPE offering proceeds, net | 3,775,126 | $377 | $14,243,353 | — | $14,243,730 | | Net income | — | — | — | $17,391,871 | $17,391,871 | | Balance at June 30, 2025 | 60,439,593 | $6,044 | $72,644,217 | $215,919,332 | $288,569,593 | Condensed Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Selected Items) | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,163,485) | $(17,576,561) | | Net cash used in investing activities | $(10,011,376) | $(10,006,554) | | Net cash provided by financing activities | $14,655,824 | $61,855,930 | | Net increase in cash, cash equivalents and restricted cash | $2,480,963 | $34,272,815 | | Cash, cash equivalents and restricted cash, end of the period | $30,502,711 | $34,648,611 | Notes to the Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for financial statements Note 1 — ORGANIZATION AND BUSINESS OPERATIONS Describes the company's organization, business operations, and strategic initiatives - AirJoule Technologies Corporation is an advanced technology company focused on developing groundbreaking sorption technologies to produce pure distilled water from air, aiming to mitigate global water and energy constraints[17] - The company's proprietary AirJoule platform is designed for commercial scale to provide distributed water generation for businesses and consumers, with particular value for industrial users (e.g., data centers, advanced manufacturing) and HVAC applications[17] - The company is focused on commercialization and scaling manufacturing through global collaborations, including with GE Vernova and Carrier Global Corporation[17] - On March 14, 2024, a Business Combination occurred where XPDB merged with Legacy Montana (now AirJoule Technologies LLC), accounted for as a reverse recapitalization with Legacy Montana as the accounting acquirer[18][20] - A joint venture (AirJoule JV) was formed with GE Vernova on March 4, 2024, with each party holding a 50% interest, and is accounted for using the equity method[22] Note 2 — LIQUIDITY AND CAPITAL RESOURCES Discusses liquidity, capital commitments, and future funding expectations - The company's primary sources of liquidity have been cash contributions from founders or equity capital raised from other investors[25] Liquidity Snapshot (June 30, 2025) | Item | Amount ($) | | :-------------------------------- | :----------- | | Retained earnings | $215.9 million | | Working capital | $29.5 million | | Cash, cash equivalents and restricted cash | $30.5 million | - On April 23, 2025, the company entered into subscription agreements for an April 2025 PIPE offering, issuing 3,775,126 shares of Class A common stock at $3.98 per share, which closed on April 25, 2025[23] - On March 25, 2025, the company entered into a common stock purchase agreement with B. Riley Principal Capital II, LLC, granting the right to sell up to $30,000,000 of newly issued common stock over a 36-month period; sales had not yet commenced as of June 30, 2025[24] - The company's remaining commitment for capital contributions to the AirJoule JV is $85.0 million as of June 30, 2025, with an additional $10.0 million contributed during the six months ended June 30, 2025[27][28] - Management expects future operating losses and negative operating cash flows to increase due to additional costs related to technology development and market/strategic relationships[26] Note 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Outlines key accounting principles, estimates, and policies - The condensed consolidated financial statements are prepared in accordance with GAAP, assuming the company will continue as a going concern[31] - The company consolidates all wholly-owned subsidiaries and accounts for investments in entities where it has significant influence but not control (e.g., AirJoule JV) using the equity method[33][34] - Significant estimates include fair values of liabilities associated with Earnout Shares, True Up Shares, Subject Vesting Shares, investment in AirJoule JV, and income taxes[38] - The company follows the asset and liability method for income taxes (ASC 740) and changed its tax status from a partnership to a corporation after the Business Combination[48] - Earnout Shares liability is classified as a liability and recognized at fair value each reporting period, with changes in fair value included in the condensed consolidated statements of operations, as settlement depends on factors beyond just the company's stock price[56] - The company is evaluating the impact of recently issued accounting standards, including ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), for future fiscal years[75][76] Note 4 — RECAPITALIZATION Details the reverse recapitalization, equity issuance, and related liabilities - The Business Combination, consummated on March 14, 2024, involved XPDB merging with Legacy Montana, and was accounted for as a reverse recapitalization, with Legacy Montana treated as the accounting acquirer[80][88] - Legacy Montana Equityholders received newly issued Class A and Class B common stock, and Legacy Montana options converted into options to purchase Class A common stock[81][82] - Eligible former Legacy Montana Equityholders have the opportunity to receive additional Earnout Shares (capped at $200.0 million) upon the company achieving certain milestones related to new production capacity, with the ability to receive shares expiring on the fifth anniversary of the Closing[84][146] - 1,380,736 Subject Vesting Shares held by the sponsor of XPDB are subject to vesting conditions tied to Earnout Shares milestones and Class A common stock price thresholds ($12.00 and $14.00)[85][86][153] - Up to 840,336 True Up Shares were to be issued to an investor if the Class A common stock trading price fell below the purchase price within one year of closing; 275,880 shares were issued on March 18, 2025, due to this triggering event[85][87][150] - During the six months ended June 30, 2024, the company expensed $54.7 million for transaction costs related to the Business Combination, including the recognition of a $53.7 million earnout shares liability, as these costs exceeded the proceeds received[90] Note 5 — EQUITY METHOD INVESTMENT Explains the investment in AirJoule, LLC and its accounting treatment - On March 4, 2024, Legacy Montana and GE Vernova formed a 50/50 joint venture, AirJoule, LLC (the "AirJoule JV"), to incorporate GE Vernova's sorbent materials into AirJoule water capture technology and commercialize products in the Americas, Africa, and Australia[93][94] - The company contributed $10.0 million in cash and a perpetual license in its intellectual property (with a carrying value of zero) to the AirJoule JV[95][100] - A gain of $333.5 million was recognized for the six months ended June 30, 2024, representing the fair value of the contributed perpetual IP license[100] - The company's remaining commitment for capital contributions to the AirJoule JV is $85.0 million as of June 30, 2025[95] - AirJoule, LLC is accounted for under the equity method, and the company recognized an equity loss from investment in AirJoule, LLC of $(4.3) million for the six months ended June 30, 2025, compared to $(0.6) million for the same period in 2024[98][103][105] Note 6 — OTHER ACCRUED EXPENSES Presents a breakdown of various accrued liabilities Other Accrued Expenses | Item | As of June 30, 2025 ($) | As of December 31, 2024 ($) | | :---------------------- | :------------------ | :---------------------- | | Accrued royalty | $150,000 | $250,000 | | Accrued payroll | $825,461 | $1,125,846 | | Professional services | $729,268 | $205,790 | | Equity Line Obligation | $286,819 | — | | Accrued other | $205,658 | $138,682 | | Total other accrued expenses | $2,197,206 | $1,720,318 | Note 7 — LEASES Details lease agreements, expenses, and future payment obligations - A property lease agreement with the Chief Executive Officer was terminated upon the close of the Business Combination on March 14, 2024[107][110] - The company's current operating lease is for $3,175 per month, with a remaining term of 45 months and a discount rate of 4.69%[108] Operating Lease Expense | Period | 2025 ($) | 2024 ($) | | :---------------------- | :--------- | :--------- | | Three Months Ended June 30 | $9,593 | $9,593 | | Six Months Ended June 30 | $19,186 | $12,791 | Future Minimum Rental Payments (June 30, 2025) | Year | Operating Lease Payments ($) | | :---------------- | :----------------------- | | Remainder of 2025 | $19,050 | | 2026 | $39,370 | | 2027 | $40,945 | | 2028 | $42,583 | | 2029 | $10,715 | | Total undiscounted lease payments | $152,663 | | Operating Lease Liability ($) | $139,999 | Note 8 — RELATED PARTY TRANSACTIONS Discloses transactions and agreements with related parties - A consultancy agreement with a company affiliated with the Chief Executive Officer for $20,000 monthly payments was terminated on May 1, 2024[111] - An office services agreement with an affiliate for $5,000 monthly payments was terminated on May 1, 2024[112] - The company assumed and repaid $540,000 related to office space and administrative services from sponsor affiliates and $900,000 contributed by the sponsor to the XPDB trust account, both repaid in May 2024[113][114] - Reimbursement of costs incurred from AirJoule, LLC for the six months ended June 30, 2025, included $0.8 million in general and administrative expenses and $0.3 million in research and development expenses[115] - TEP Montana, LLC, managed by the Executive Chairman, purchased equity interests that converted into Class A common stock[116] Note 9 — STOCKHOLDERS' EQUITY Provides information on capital structure, common stock, and warrants Warrants Outstanding (June 30, 2025) | Type of Warrant | Number Outstanding (Number) | | :---------------------- | :----------------- | | Public Warrants | 12,657,596 | | Private Placement Warrants | 8,900,000 | - Public Warrants are exercisable at $11.50 per share and may be redeemed by the company if the Class A common stock price equals or exceeds $18.00 for 20 trading days within a 30-trading day period[119][124] - Private Placement Warrants have identical terms to Public Warrants but are exercisable on a cashless basis and are non-redeemable[121] - The April 2025 PIPE offering resulted in the issuance of 3,775,126 newly issued shares of Class A common stock at a purchase price of $3.98 per share, closing on April 25, 2025[127] - During the year ended December 31, 2024, subscription agreements brought in approximately $61.8 million in gross proceeds, leading to the issuance of 5,807,647 shares of Class A common stock[125] Note 10 — SHARE-BASED COMPENSATION Details share-based compensation plans, expenses, and unrecognized costs Share-Based Compensation Expense | Expense Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $1,405,671 | $146,959 | $2,370,303 | $146,959 | | Research and development | $29,532 | $3,560 | $49,293 | $3,560 | | Total share-based compensation | $1,435,203 | $150,519 | $2,419,596 | $150,519 | - As of June 30, 2025, 878,022 Legacy Montana options are outstanding[133] - The 2024 Incentive Award Plan, effective March 14, 2024, had 4,887,182 shares of common stock available for future issuance as of June 30, 2025[134] - The 2024 Employee Stock Purchase Plan (ESPP) reserved 1,074,213 shares of common stock, with the share reserve increasing by 559,286 on January 1, 2025[135][136] Unrecognized Compensation Cost (June 30, 2025) | Award Type | Unrecognized Cost ($) | Weighted-Average Amortization Period (Years) | | :-------------------------- | :---------------- | :----------------------------------- | | Stock Options | $2.1 million | 2.93 years | | RSUs with Service-Only Conditions | $6.7 million | 2.68 years | | RSUs with Market-Based Conditions | $4.3 million | 2.50 years | Note 11 — FAIR VALUE MEASUREMENTS Explains methodologies and inputs for fair value measurements of liabilities Liabilities Measured at Fair Value (June 30, 2025) | Liability | Level 3 Fair Value ($) | | :-------------------------- | :----------------- | | Earnout Shares liability | $5,416,000 | | Subject Vesting Shares liability | $1,411,000 | | Total liabilities | $6,827,000 | - The Earnout Shares liability decreased to $5.4 million (representing 853,612 shares) as of June 30, 2025, from $24.5 million (2,115,227 shares) as of December 31, 2024, primarily due to a decrease in stock price, changes in the timing of expected future cash flows, and an increase in volatility[149] - The estimated fair value of Earnout Shares is determined using a Monte Carlo simulation, incorporating expected EBITDA, stock price, and a 25% discount rate[149] - The Subject Vesting Shares liability decreased to $1.4 million as of June 30, 2025, from $7.8 million as of December 31, 2024, with its fair value determined by a Monte Carlo simulation considering $12.00 and $14.00 vesting conditions and the Earnout Milestone Amount[154] - The True Up Shares liability's fair value was determined using a Monte Carlo simulation; 275,880 shares were issued on March 18, 2025, following a triggering event where the Class A common stock price fell below $8.50 for 15 consecutive trading days[150][151] - Nonrecurring fair value measurements, such as the Investment in AirJoule, LLC and Equity Line Obligation liability, are classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs[155] Note 12 — COMMITMENTS AND CONTINGENCIES Outlines legal matters, capital commitments, and contingent liabilities - The company is involved in various legal matters in the normal course of business, but management believes that any sustained losses would not have a material adverse effect on its financial position or results of operations[156] - As an early-stage business without current operations, product sales, or revenue, the company has historically been dependent on external capital to fund overhead and product development costs[157] - Under a patent license agreement, the company expensed minimum royalty amounts of $75,000 for the three months ended June 30, 2025, and $150,000 for the six months ended June 30, 2025[158] - The company has a 50/50 joint venture with CATL US Inc., CAMT Climate Solutions Ltd. ("CAMT"), for exclusive commercialization of AirJoule technology in Europe and Asia[159][212] - Legacy Montana and CATL US have each agreed to contribute $6.0 million to CAMT, but no action to establish a business plan or operating budget has occurred, and no amount was funded to CAMT as of June 30, 2025[160][161][213] Note 13 — SEGMENT INFORMATION Presents financial information for operating segments and reconciliations - The company operates as a single segment, with the senior executive committee (CEO and CFO) identified as the chief operating decision maker, reviewing operating results for the company as a whole[35] Segment Net Income Reconciliation | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $283,733 | $216,480 | $526,758 | $242,626 | | Gain on contribution to AirJoule, LLC | — | — | — | $333,500,000 | | Net change in fair value of liabilities | $7,210,000 | $14,687,000 | $25,622,106 | $4,859,000 | | General and administrative | $3,751,211 | $3,211,205 | $6,537,695 | $4,024,444 | | Research and development | $401,623 | $1,050,804 | $789,542 | $1,896,961 | | Income tax benefit (expense) | $1,558,882 | $1,237,824 | $3,201,539 | $(84,487,339) | | Segment net income | $2,513,213 | $13,429,895 | $17,391,871 | $194,985,187 | Segment Assets Reconciliation | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :---------------------- | :------------ | :---------------- | | Investment in AirJoule, LLC | $343,858,688 | $338,178,633 | | Other segment assets | $32,226,205 | $31,673,487 | | Segment assets | $376,084,893 | $369,852,120 | | Consolidated assets | $376,084,893 | $369,852,120 | Note 14 — SUBSEQUENT EVENTS Discloses significant subsequent events - In July 2025, subsequent to the reporting period, the company contributed an additional $2.75 million in capital to the AirJoule JV[164] Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations Management's discussion and analysis of financial condition, operations, growth strategy, and liquidity Company Overview Provides an overview of AirJoule Technologies Corporation's business and mission - AirJoule Technologies Corporation is an advanced technology company dedicated to freeing the world from water and energy constraints by delivering groundbreaking sorption technologies that produce pure distilled water from air[168] - The proprietary AirJoule platform aims to mitigate water scarcity through distributed water generation for industrial users (e.g., data centers, advanced manufacturing) and HVAC applications, leveraging waste heat to produce low-cost pure distilled water and dehumidified air[168] - The company plans to manufacture initial AirJoule systems capable of producing over 1,000 liters per day in 2025 for customer demonstrations, with commercial sales scaling expected in 2026[168] - Commercialization and manufacturing scaling are pursued through global collaborations, including with GE Vernova and Carrier Global Corporation[168] Growth Strategy and Outlook Outlines strategic plans for market expansion and business development - The company anticipates significant growth opportunities by offering AirJoule in global markets with high demand for water, dehumidified air, and cooling, estimating a combined total addressable market of approximately $450 billion[169] - Target industries include data centers (addressing energy/water efficiency), advanced manufacturing (cost-effective dehumidification), military (support in water-scarce environments), and HVAC (reducing energy consumption and refrigerant use)[170] - The strategy involves leveraging strategic partnerships to accelerate market penetration and scale manufacturing capabilities, gaining access to R&D expertise, supply chains, sales channels, and service networks[171] Recent Developments Highlights significant recent corporate events and financial transactions - On April 23, 2025, the company entered into subscription agreements for an April 2025 PIPE offering, issuing 3,775,126 shares of Class A common stock at $3.98 per share, which closed on April 25, 2025[172] - On March 25, 2025, the company entered into a committed equity facility with B. Riley Principal Capital II, LLC, allowing the right, but not obligation, to sell up to $30,000,000 of common stock over 36 months; sales had not yet commenced as of June 30, 2025[173] - On April 25, 2025, the company entered into the Amended LLC Agreement, and subsequently contributed an additional $2.75 million in capital to the AirJoule JV in July 2025[174] Components of Our Results of Operations Explains key revenue and expense categories impacting financial performance - The company anticipates earning revenue from the sale of key components for AirJoule systems but had not earned any revenue from operations as of June 30, 2025[175] - Operating expenses are classified into General and administrative, Research and development, Sales and marketing, Transaction costs incurred in connection with business combination, and Depreciation and amortization[176][177] Results of Operations Analyzes financial performance, including net income and operating expense changes Net Income Comparison | Period | 2025 ($) | 2024 ($) | Change ($) | | :------------------------------- | :----------- | :----------- | :----------- | | Three Months Ended June 30 | $2,513,213 | $13,429,895 | $(10,916,682) | | Six Months Ended June 30 | $17,391,871 | $194,985,187 | $(177,593,316) | Operating Expenses Comparison (Six Months Ended June 30) | Expense Category | 2025 ($) | 2024 ($) | Change ($) | | :-------------------------- | :----------- | :----------- | :----------- | | General and administrative | $6,537,695 | $4,024,444 | $2,513,251 | | Research and development | $789,542 | $1,896,961 | $(1,107,419) | - The $2.5 million increase in general and administrative expenses for the six months ended June 30, 2025, was primarily due to a $2.4 million increase in share-based compensation and a $1.3 million increase in salaries and benefits, partially offset by decreases in audit/legal fees and reimbursements from AirJoule, LLC[181][182] - The $1.1 million decrease in research and development expenses for the six months ended June 30, 2025, was mainly driven by a $1.1 million reduction in purchasing R&D materials, patent fees, and consulting services, partially offset by increased share-based compensation and salaries[183][184] - A significant non-recurring gain of $333.5 million on the contribution to AirJoule, LLC was recognized in the six months ended June 30, 2024, with no such gain in 2025[179][189] - Equity loss from investment in AirJoule, LLC increased to $(4.3) million for the six months ended June 30, 2025, from $(0.6) million in the prior year[179][192] - The change in fair value of Earnout Shares liability resulted in a gain of $19.1 million for the six months ended June 30, 2025, compared to $5.4 million in 2024, primarily due to a decrease in stock price, changes in expected cash flow timing, and increased volatility[179][193] - Income tax benefit was $3.2 million for the six months ended June 30, 2025, compared to an expense of $(84.5) million in 2024, with the prior year reflecting a deferred tax expense from the IP license contribution[179][196] Liquidity and Capital Resources Discusses cash position, funding sources, and capital commitments - The company's primary sources of liquidity are cash from founder contributions and equity capital raised from other investors[201] Liquidity Snapshot (June 30, 2025) | Item | Amount ($) | | :-------------------------------- | :----------- | | Retained earnings | $215.9 million | | Working capital | $29.5 million | | Cash, cash equivalents and restricted cash | $30.5 million | - Net proceeds from the April 2025 PIPE Offering amounted to $14.5 million[209] - The company has a committed equity facility to sell up to $30,000,000 of common stock over 36 months, though sales had not commenced as of June 30, 2025[198][199] - The remaining capital commitment to the AirJoule JV is $85.0 million as of June 30, 2025, with $10.0 million contributed during the six months ended June 30, 2025[200][203] Cash Flows (Six Months Ended June 30) | Activity | 2025 ($) | 2024 ($) | | :-------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(2,163,485) | $(17,576,561) | | Net cash provided by financing activities | $14,655,824 | $61,855,930 | Contractual Obligations and Commitments Details future payment obligations under various agreements - The company has minimum royalty obligations under a patent license agreement, with $75,000 expensed for the three months ended June 30, 2025, and $150,000 for the six months ended June 30, 2025[211] - The company has a 50/50 joint venture with CATL US Inc., CAMT Climate Solutions Ltd. ("CAMT"), for exclusive commercialization of AirJoule technology in Europe and Asia[212][214] - Each partner in CAMT agreed to contribute $6.0 million, but no funds or assets have been contributed to the joint venture as of June 30, 2025, as a business plan and operating budget have not yet been set[213] Critical Accounting Estimates Identifies key accounting estimates requiring significant management judgment - There have been no material changes to the critical accounting policies as disclosed in the Quarterly Report on Form 10-Q for the three months ended March 31, 2025[215] Recent Accounting Pronouncements Refers to new accounting standards and their potential impact - A discussion of recently issued accounting standards applicable to the company is provided in Note 3 - Summary of Significant Accounting Policies[216] Off Balance Sheet Arrangements Confirms absence of off-balance sheet financial arrangements - The company did not have any off-balance sheet arrangements as of June 30, 2025[217] Emerging Growth Company Status Explains emerging growth company status and its implications - The company is an emerging growth company (EGC) under the JOBS Act, which allows it to delay adopting new or revised accounting standards and rely on reduced reporting requirements[218][219] - The EGC status will expire at the earliest of: the fifth anniversary of XPDB's IPO, achieving $1.235 billion in annual gross revenue, being deemed a 'large accelerated filer' ($700.0 million in non-affiliate securities), or issuing over $1.0 billion in non-convertible debt during the previous three years[220] Item 3. Quantitative and Qualitative Disclosures About Market Risk Confirms no applicable quantitative or qualitative disclosures about market risk - Not applicable[222] Item 4. Controls and Procedures Details management's evaluation of disclosure controls and changes in internal control over financial reporting - Management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[223] - There were no significant changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[224] PART II - OTHER INFORMATION Provides additional information including legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings Details legal matters, with no expected material adverse effect on financial position or operations - The company is involved in various legal matters arising in the normal course of business[227] - Management believes that any losses sustained from current legal proceedings would not have a material adverse effect on the company's business, operating results, financial condition, or cash flows[227] Item 1A. Risk Factors Refers to the Annual Report on Form 10-K for a comprehensive discussion of business risks - Readers are referred to Part I, Item 1A, Risk Factors in the Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of risks and uncertainties that could adversely affect the company's operations and financial results[228] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Discloses recent unregistered equity sales, including PIPE offering and committed equity facility - On April 23, 2025, the company entered into the April 2025 PIPE Subscription Agreements, issuing 3,775,126 newly issued shares of Class A common stock at $3.98 per share, with proceeds expected to be used for future capital expenditures[229] - On March 25, 2025, the company entered into an Equity Line Purchase Agreement, allowing it to sell up to 4,250,000 shares of Class A common stock to the Equity Line Investor; sales had not commenced as of June 30, 2025[230] - Both the PIPE offering and the Equity Line Purchase Agreement securities were issued and sold in reliance on Section 4(a)(2) of the Securities Act[229][230] Item 3. Defaults Upon Senior Securities Confirms no defaults upon senior securities - None[231] Item 4. Mine Safety Disclosures States mine safety disclosures are not applicable - Not applicable[232] Item 5. Other Information Provides additional information on Rule 10b5-1 trading and executive severance plan - No director or officer adopted or terminated a "Rule 10b5-1 trading agreement" or "non-Rule 10b5-1 trading agreement" during the quarter ended June 30, 2025[233] - On August 12, 2025, the Compensation Committee adopted the Amended and Restated Executive Severance Plan, which amends the Original Plan in its entirety[234] - Under the Amended Plan, named executive officers (Matthew B. Jore, Stephen S. Pang, Patrick C. Eilers) are eligible for enhanced severance payments and benefits in the event of a "CIC Qualifying Termination" (termination without cause or for good reason during a change in control period)[235] - Severance benefits for a CIC Qualifying Termination include a lump-sum payment of 18-24 months of base salary, 18-24 months of COBRA premium contributions, and 150-200% of the target annual cash performance bonus[235] Item 6. Exhibits Lists all documents filed as exhibits, including agreements and regulatory filings - The exhibits include merger agreements, organizational documents (Certificate of Incorporation, Bylaws), warrant agreements, common stock purchase agreements, registration rights agreements, subscription agreements, the Amended and Restated Limited Liability Company Agreement of AirJoule, LLC, and compensation plans (Amended and Restated Non-Employee Director Compensation Program, Amended and Restated Executive Severance Plan)[240] SIGNATURES Contains the official certifications for the quarterly report filing Signatures Contains official signatures certifying the quarterly report filing - The report was duly caused to be signed on behalf of AirJoule Technologies Corporation by Stephen S. Pang, Chief Financial Officer, on August 14, 2025[243][244]