Company: AIRJW
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001013762-25-002263
Chunk: 491

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 1C
Chunk 491
---

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. We account for forfeitures when the forfeitures occur.

We estimate 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.

We estimate the fair value of Earnout Shares (as described below),
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 applicable 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, the 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 our share-based compensation. During the period from
the date of the Business Combination through December 31, 2024 we did not record share-based compensation expense associated with these Earnout
Shares as the performance conditions associated with these Earnout Shares were not deemed probable of achievement. Unrecognized share-based
compensation expense for these Earnout Shares with a performance-based vesting condition that was not deemed probable of occurring
as of December 31, 2024 was $6.6 million which is expected to vest subject to the performance-based