Company: AIRJW
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001013762-25-002263
Chunk: 195

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 1
Chunk 195
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, 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 a basis difference of $266.0 million between the Company’s investment and the amount recorded in member’s
capital by the investee, AirJoule, LLC, related to in-process R&D and goodwill which, as of December 31, 2024, have indefinite lives.

The Company determined the fair value of the IP license by applying
the multi-period excess earnings method. The excess earnings valuation method estimates the value of the IP license equal to
the present value of the incremental after-tax cash flows attributable to that IP license over its remaining economic life. Some of the
more significant assumptions utilized in our asset valuations included projected revenues, probability of commercial success, and the