Company: AIRJW
Filing Date: 2025-05-05
Form Type: 424B3
Source: 0001213900-25-039770
Chunk: 195

Company: AirJoule Technologies Corp.
Filing Date: 2025-05-05
Form: 424B3
Chunk 195
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 derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

The True Up Shares issued under one of the Subscription
Agreements do not qualify as equity under ASC 815; therefore, the True Up Shares are required to be classified as a liability and
measured at fair value with subsequent changes in fair value recorded in the consolidated statements of operations. The fair value of
the derivative liability is discussed in Note 12 — Fair Value Measurements.

<div align='center'>F-13

AIRJOULE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</div>

Note 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

The Subject Vesting Shares liability was an assumed
liability of XPDB. The Subject Vesting Shares vest and are no longer subject to forfeiture as described in Note 4 — Recapitalization.
They do not meet the “fixed-for-fixed” criterion and thus are not considered indexed to the Company’s stock price. As
such, management determined that the Subject Vesting Shares should be classified as a liability and recognized at fair value at each reporting
period with changes in fair value included the consolidated statements of operations . The estimated fair value of the Subject Vesting
Shares was determined utilizing a Monte Carlo simulation, with underlying forecast mathematics based on geometric Brownian motion in a
risk-neutral framework. The Calculation of the value of the Subject Vesting Shares considered the $12.00 and $14.00 vesting conditions
in addition to the vesting related to the milestones associated with the Earnout Shares. Management’s valuation of the Subject Vesting
Shares liability involves certain assumptions requiring significant judgment and actual results may differ from assumed and estimated
amounts. See Note 12 — Fair Value Measurements.

Share-Based Compensation

The Company accounts for share-based compensation
arrangements granted to employees and non-employees in accordance with ASC 718, Share-based Compensation, by measuring the
grant date fair value of each award and recognizing the resulting expense over the period during which the recipient is required to perform
services in exchange for the award. Equity-based compensation expense is only recognized for awards subject to performance conditions
if it is probable that the applicable performance conditions will be achieved. The Company accounts for forfeitures when the forfeitures
occur.

The Company estimates the fair value of stock
option awards subject to only a service condition on the date of grant using the Black-Scho