Company: AIRJW
Filing Date: 2025-03-27
Form Type: S-1
Source: 0001013762-25-002897
Chunk: 205

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-27
Form: S-1
Chunk 205
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 share immediately following the Closing.

The settlement of the Earnout Shares to the holders of Legacy Montana common units contains variations in something other than the fair value of the issuer’s equity shares. As such, management determined that they should be classified as a liability and recognized at fair value at each reporting period with changes in fair value included in earnings. The Earnout Shares are subject to ASC 718 and are accounted for as post-combination compensation cost.

The estimated fair value of the Earnout Shares was determined with a Monte Carlo simulation using a distribution of potential outcomes for expected EBITDA and stock price at expected commission dates, utilizing a correlation coefficient for EBITDA and stock price, and assuming $ million of Annualized EBITDA per production line, with each of the production lines commissioned over a five-year period. EBITDA was discounted to the valuation date with

F-31

AIRJOULE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 12 — FAIR VALUE MEASUREMENTS (cont.)

a weighted average cost of capital estimate and forecasted to each estimated commission date. Earnout mechanics at each estimated commission date were assessed, and if the Earnout Thresholds were achieved, the future value of the Earnout Shares was discounted to the valuation date utilizing a risk-free rate commensurate with the overall term. The commission dates used reflected XPDB’s management’s best estimates regarding the time to complete full construction and operational viability of a production line, including all permitting, regulatory approvals and necessary or useful inspections. The Earnout term of years and the Earnout mechanics which impact the timing of future cash flows represent contractual inputs.

|                          |     |   |        As of 
 December 31, 
         2024 |   |     |   |     As of 
 March 14, 
      2024 |   |
|:-------------------------|:----|:--|-------------:|:--|:----|:--|----------:|:--|
| Stock Price(1)           |     | $ |         7.97 |   |     | $ |     10.00 |   |
| Volatility               |     |   |           40 | % |     |   |        35 | % |
| Risk free rate of return |     |   |         4.30 | % |     |   |      4.24 | % |
| Expected term (in years) |     |   |