Company: AIRJW
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001013762-25-002263
Chunk: 626

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 2
Chunk 626
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 incremental borrowing rate based on the information available
at commencement date over the respective lease term in determining the present value of lease payments. The Company has elected to utilize
the practical expedient to account for lease and non-lease components together as a single combined lease component. The Company’s
lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected to not apply the
recognition requirement of ASC 842, Leases of the FASB to leases with a term of 12 months or less for all classes of
assets.

Warrants

The Company determines the accounting classification of warrants it
issues as either liability or equity classified by first assessing whether the warrants meet the liability classification in accordance
with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480”),
then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s
Own Stock (“ASC 815”). In order for a warrant to be classified in stockholders’ equity (deficit), the warrant must
be (i) indexed to the Company’s equity and (ii) meet the conditions for equity classification.

If a warrant does not meet the conditions for stockholders’ deficit
classification, it is carried on the consolidated balance sheets as a warrant liability measured at fair value, with subsequent changes
in the fair value of the warrant recorded in other non-operating gains (losses) in the consolidated statements of operations. If
a warrant meets both conditions for equity classification, the warrant is initially recorded, at its relative fair value on the date of
issuance, in stockholders’ equity (deficit) in the consolidated balance sheets, and the amount initially recorded is not subsequently
remeasured at fair value.

Income Taxes 

Prior to the Business Combination on March 14, 2024, the Company was
a limited liability company and treated as a partnership for income tax purpose. As a partnership, the Company was not directly liable
for federal income taxes. As of the date of the Business Combination, the operations of the Company ceased to be taxed as a partnership
resulting in a change in tax status for federal and state income tax purposes.

The Company follows the asset and liability method of accounting for
income