Company: AIRJW
Filing Date: 2025-05-05
Form Type: 424B3
Source: 0001213900-25-039770
Chunk: 94

Company: AirJoule Technologies Corp.
Filing Date: 2025-05-05
Form: 424B3
Chunk 94
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 reflected 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 5 years
and the Earnout mechanics represent contractual inputs. The contingent Earnout Shares liability involves certain assumptions requiring
significant judgment and actual results may differ from assumed and estimated amounts.

Derivative Financial Instruments and Other Financial Instruments Carried at Fair Value

We do not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including the True Up Shares
issued in connection with the Subscription Agreement and the Subject Vesting Shares issued in connection with the Business Combination,
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 (defined
below) and FASB ASC 815, Derivatives and Hedging, or ASC 815. The classification of 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 the Subscription
Agreement do not qualify as equity under ASC 815; therefore, the Class A Common Stock, or the True Up Shares is required to
be classified as a liability and measured at fair value with subsequent changes in fair value recorded in earnings. Changes in the estimated
fair value of the derivative liability is recognized as a non-cash gain or loss on the consolidated statements of operations.

The Subject Vesting Shares liability was an assumed
liability of XPDB. The Subject Vesting Shares liability vest and are no longer subject to forfeiture. They do not meet the “fixed-for-fixed”
criterion and thus are not considered indexed to the issuer’s stock. 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 in earnings.
The estimated fair value of the Subject Vesting Share liability 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 Earnout Milestone Amount. The Subject Vesting
Shares liability involves certain assumptions requiring significant judgment and actual results may differ from assumed and estimated
amounts.

Business Combinations

We evaluate