Company: AIRJW
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001013762-25-002263
Chunk: 183

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 1
Chunk 183
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ing 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-Scholes valuation model. The Black-Scholes model requires the use of
highly subjective and complex assumptions, including the stock option’s expected term, the price volatility of the underlying stock,
the applicable risk-free interest rate and the expected dividend yield of the underlying common stock, as well as an estimate of the fair
value of the common stock underlying the stock option.

The Company estimates the fair value of Earnout Shares awards to employees,
which are considered compensatory awards and accounted for under ASC 718 using the Monte-Carlo simulation model. The Monte-Carlo
simulation model was selected as the valuation methodology for the Earnout Shares due to the path-dependent nature of applicable triggering
events. Under ASC 718, such Earnout Shares are measured at fair value as of the grant date and expense is recognized over the applicable
time-based vesting period (the triggering event is a market condition and does not impact expense recognition). The Monte-Carlo model
requires the use of highly subjective and complex assumptions, estimates and judgements, including the current stock price, the volatility
of the underlying stock, expected term the risk-free interest rate, the selection of comparable companies, and the probability of possible
future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations
as of each valuation date and may have a material impact on the valuation of share based compensation arrangements. An increase of 100-basis
points in interest rates would not have a material impact on the Company