Company: AIRJW
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001013762-25-002263
Chunk: 539

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 1C
Chunk 539
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 or GE Vernova determines that the Company fails to meet certain
financial performance benchmarks, GE Vernova may require the Company to purchase GE Vernova’s interest for a total purchase price
of $1.00.

AirJoule, LLC is a variable interest entity for which the Company has
determined there is shared power with GE Vernova and therefore accounts for the VIE under the equity method of accounting. The Company
considered the power to direct significant activities and obligation to absorb losses or right to receive benefits in assessing whether
or not the VIE should be accounting for under the equity method of accounting. Certain assumptions the Company used to reach its conclusion
included the lack of reconsideration events, the assessment of decision-making rights based on contractual agreements and expected financial
exposure.

The Company applies the equity method to an investment in common stock
of a nonconsolidated entity. In addition to $10.0 million in cash, the Company contributed a perpetual license in its intellectual property
with a carrying value of zero in exchange for its investment in AirJoule, LLC. In applying the equity method, the Company’s investment
was initially recorded at fair value on the consolidated balance sheet. As it relates to the contributed perpetual license, the Company
followed the following the guidance in ASC 610-20, Sale or Transfer of Non-financial assets, which states the transfer of a license
of IP that is not part of the entity’s ordinary activities, the entity should apply the licensing guidance in ASC 606, Revenue
from Contracts with Customers, by analogy when evaluating the recognition and measurement of consideration received in exchange for
transferring the rights to the IP and record this as other income in the statements of operations. As such the Company recognized a gain
of $333.5 million (and treated as a temporary item for tax purposes resulting in a deferred tax liability of approximately $87.8 million)
as presented on the accompanying consolidated statements of operations.

The Company evaluated whether there was a basis difference between
the carrying value and fair value of the Company’s proportionate share of the investee’s underlying net assets. AirJoule,
LLC has elected to early adopt ASU 2023-05, Business Combinations – Joint Venture Formations (Subtopic 805-60), and, as a
result measured the contributed assets at fair value. AirJoule, LLC was deemed a business as defined in ASC 805, Business Combinations,
and, as such there is