AIRJ 10-Q
AirJoule Technologies Corp. (AIRJ)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from ______________ to ______________
Commission File Number
(Exact name of registrant as specified in its charter)
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(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 1, 2025, there were
AIRJOULE TECHNOLOGIES CORPORATION
TABLE OF CONTENTS
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Item 1. |
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Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (Unaudited) |
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Notes to the Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition And Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
Other Information |
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Item 6. |
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i
PART 1 - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
AIRJOULE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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December 31, |
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2025 |
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2024 |
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(unaudited) |
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Assets |
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Current assets |
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Cash, cash equivalents and restricted cash |
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$ |
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$ |
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Due from related party |
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Prepaid expenses and other current assets |
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Total current assets |
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Operating lease right-of-use asset |
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Property and equipment, net |
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Investment in AirJoule, LLC |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Other accrued expenses |
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Operating lease liability, current |
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True Up Shares liability |
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Total current liabilities |
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Earnout Shares liability |
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Subject Vesting Shares liability |
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Operating lease liability, non-current |
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Deferred tax liability |
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Total liabilities |
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(Note 12) |
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Stockholders’ equity |
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Preferred stock, $ |
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$ |
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$ |
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Class A common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
AIRJOULE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Three Months Ended |
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Six Months Ended |
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2025 |
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2024 |
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2025 |
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2024 |
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Cost and expenses: |
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General and administrative |
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$ |
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$ |
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$ |
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$ |
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Research and development |
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Sales and marketing |
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Transaction costs incurred in connection with business combination |
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Depreciation and amortization |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense): |
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Interest income |
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Gain on contribution to AirJoule, LLC |
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Equity loss from investment in AirJoule, LLC |
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( |
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( |
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( |
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( |
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Change in fair value of Earnout Shares liability |
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Change in fair value of True Up Shares liability |
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Change in fair value of Subject Vesting Shares liability |
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( |
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Gain on settlement of legal fees |
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Other expense, net |
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( |
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( |
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Total other income, net |
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Income before income taxes |
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Income tax benefit (expense) |
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( |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Weighted average Class A common stock outstanding, basic |
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Basic net income per share, Class A common stock |
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$ |
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$ |
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$ |
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$ |
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Weighted average Class A common stock outstanding, diluted |
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Diluted net income, per share, Class A common stock |
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$ |
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$ |
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$ |
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$ |
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Weighted average Class B common stock outstanding, basic and diluted |
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Basic net income per share, Class B common stock |
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$ |
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$ |
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$ |
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$ |
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Diluted net income per share, Class B common stock |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
AIRJOULE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ AND STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
For the Three and Six Months Ended June 30, 2025
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Class A |
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Additional |
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Shares |
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Amount |
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Capital |
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Retained Earnings |
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Total Stockholders’ Equity |
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Balance at December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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Exercise of options |
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— |
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Share-based compensation |
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— |
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— |
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— |
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Issuance of True up Shares |
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— |
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Net income |
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— |
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— |
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— |
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Balance at March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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Exercise of options |
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— |
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Share-based compensation |
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— |
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— |
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— |
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PIPE offering proceeds, net |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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( |
) |
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— |
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Net income |
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— |
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— |
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— |
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Balance at June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
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For the Three and Six Months Ended June 30, 2024
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Members’ |
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Preferred |
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Class A |
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Class B |
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Contribution |
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Units |
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Shares |
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Amount |
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Shares |
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Amount |
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Subscription Receivable |
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Additional |
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Retained Earnings (Accumulated Deficit) |
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Total Stockholders’ Equity (Deficit) |
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Balance at December 31, 2023 |
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$ |
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$ |
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— |
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$ |
— |
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— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
( |
) |
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$ |
( |
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Retroactive application of recapitalization |
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( |
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( |
) |
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— |
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— |
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— |
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Balance at December 31, 2023 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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Exercise of warrants |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of options |
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— |
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— |
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— |
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— |
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— |
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— |
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Reverse capitalization, net of transaction costs |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Issuance of common stock pursuant to June 2024 subscription agreement |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of warrants |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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Exercise of options |
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— |
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— |
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— |
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— |
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— |
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— |
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Subscription proceeds received |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at June 30, 2024 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
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$ |
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3
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
AIRJOULE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Six Months Ended June 30, |
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2025 |
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2024 |
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Cash flows from operating activities |
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Net income |
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$ |
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$ |
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Adjustment to reconcile net income to cash used in operating activities: |
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Depreciation and amortization |
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Deferred tax expense (benefit) |
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( |
) |
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Amortization of operating lease right-of-use assets |
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Change in fair value of Earnout Shares liability |
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( |
) |
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( |
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Change in fair value of True Up Shares liability |
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( |
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( |
) |
Change in fair value of Subject Vesting Shares liability |
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( |
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Change in fair value of Equity Line Obligation liability |
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Gain on contribution to AirJoule, LLC |
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( |
) |
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Equity loss from investment in AirJoule, LLC |
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Non-cash transaction costs in connection with business combination |
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Gain on settlement of legal fees |
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( |
) |
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Share-based compensation |
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Changes in operating assets and liabilities: |
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Due from related party |
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Due to related party |
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( |
) |
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Prepaid expenses and other current assets |
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( |
) |
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( |
) |
Operating lease liabilities |
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( |
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( |
) |
Accounts payable |
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( |
) |
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Accrued expenses, accrued transaction costs and other liabilities |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities |
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||
Purchases of fixed assets |
|
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( |
) |
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|
( |
) |
Investment in AirJoule, LLC |
|
|
( |
) |
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|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities |
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|
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||
Proceeds from the exercise of warrants |
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||
Proceeds from the exercise of options |
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||
Proceeds from the PIPE offering, net |
|
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|
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|
||
Proceeds from the issuance of common stock pursuant to subscription agreements |
|
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|
|
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||
Net cash provided by financing activities |
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||
Net increase in cash, cash equivalents and restricted cash |
|
|
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|
|
||
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of the period |
|
$ |
|
|
$ |
|
||
Supplemental non-cash investing and financing activities: |
|
|
|
|
|
|
||
Issuance of True Up Shares |
|
$ |
|
|
$ |
|
||
Deferred offering costs included in accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
Initial recognition of True Up Shares liability |
|
$ |
|
|
$ |
|
||
Initial recognition of Subject Vesting Shares liability |
|
$ |
|
|
$ |
|
||
Initial recognition of ROU asset and operating lease liability |
|
$ |
|
|
$ |
|
||
Liabilities combined in recapitalization, net |
|
$ |
|
|
$ |
|
||
Contribution to AirJoule, LLC of license to technology |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information: |
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|
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|
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||
Taxes paid |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
AIRJOULE TECHNOLOGIES CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — ORGANIZATION AND BUSINESS OPERATIONS
We are an advanced technology company whose purpose is to free the world from its water and energy constraints by delivering groundbreaking sorption technologies. Our vision is to be the leading technology platform that unleashes the power of water from air. AirJoule produces pure distilled water from air, and our proprietary AirJoule platform, at commercial scale, will mitigate water scarcity through distributed water generation for businesses and consumers around the world. Our products are especially valuable for industrial users, which generate significant amounts of waste heat that can be used to power our sorption technologies to produce low cost pure distilled water and dehumidified air – two key inputs for a variety of industrial activities, including data centers and advanced manufacturing. In HVAC applications, AirJoule is designed to reduce energy consumption, minimize or even eliminate the use of environmentally-harmful refrigerants, and generate material cost efficiencies for air conditioning systems. We are focused on commercialization and scaling manufacturing of our AirJoule products through our global collaborations, including with GE Vernova and Carrier Global Corporation (“Carrier”), and we believe that deploying AirJoule units worldwide will serve our purpose of freeing the world of its water and energy constraints.
Power & Digital Infrastructure Acquisition II Corp (“XPDB”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated June 5, 2023, as amended on February 5, 2024, with XPDB Merger Sub, LLC, a direct wholly-owned subsidiary of XPDB (“Merger Sub”), and AirJoule Technologies LLC, formerly known as Montana Technologies LLC (“Legacy Montana”). On March 14, 2024, pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Montana, with Legacy Montana surviving the merger as a wholly-owned subsidiary of XPDB (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with closing the Business Combination (the “Closing”), XPDB changed its name from “Power & Digital Infrastructure Acquisition II Corp.” to “Montana Technologies Corporation.”
In November 2024, to better align the Company’s name with its business operations and AirJoule technology, the Company changed its name from Montana Technologies Corporation to AirJoule Technologies Corporation, and its wholly-owned subsidiary changed its name from Montana Technologies LLC to AirJoule Technologies LLC.
Prior to the Business Combination, all of the outstanding preferred units of Legacy Montana were converted into Class B common units. As a result of the Business Combination, (i) each issued and outstanding Class B common unit and Class C common unit of Legacy Montana was converted into the right to receive approximately
The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. generally accepted accounting principles (“GAAP”). Under this method of accounting, although XPDB acquired the outstanding equity interest in Legacy Montana in the Business Combination, XPDB is treated as the acquired company and Legacy Montana was treated as the accounting acquirer for financial statement purposes. Accordingly, the Business Combination was treated as the equivalent of Legacy Montana issuing stock for the net assets of XPDB, accompanied by a recapitalization.
Furthermore, the historical financial statements of Legacy Montana became the historical financial statements of the Company upon the consummation of the Merger. As a result, the condensed consolidated financial statements reflect (i) the historical operating results of Legacy Montana prior to the Business Combination; (ii) the combined results of XPDB and Legacy Montana following the Closing; (iii) the assets and liabilities of Legacy Montana at their historical cost and (iv) Legacy Montana’s equity structure for all periods presented, as affected by the recapitalization presentation after completion of the Business Combination. See Note 4 - Recapitalization for further details of the Business Combination.
On January 25, 2024, Legacy Montana entered into a joint venture formation framework agreement (the “Framework Agreement”) with GE Ventures LLC (“GE Vernova”), a Delaware limited liability company and, solely for the purposes specified therein, GE Vernova LLC, a Delaware limited liability company, pursuant to which Legacy Montana and GE Vernova agreed, subject to the terms and conditions of the Framework Agreement, including certain closing conditions specified therein, to form a joint venture (the “AirJoule JV”) in which Legacy Montana and GE Vernova will each hold a
6
Note 2 — LIQUIDITY AND CAPITAL RESOURCES
The April 2025 PIPE
On April 23, 2025, the Company entered into subscription agreements (the “April 2025 PIPE Subscription Agreements”) with certain investors (the “April 2025 PIPE Investors”), pursuant to which, among other things, the April 2025 PIPE Investors agreed to subscribe for and purchase from AirJoule, and AirJoule agreed to issue and sell to the April 2025 PIPE Investors, an aggregate of
Committed Equity Facility
On March 25, 2025, the Company entered into a common stock purchase agreement (the “Equity Line Purchase Agreement”) with B. Riley Principal Capital II, LLC (the “Equity Line Investor”). Under the terms and subject to the conditions of the Equity Line Purchase Agreement, the Company has the right, but not the obligation, to sell to the Equity Line Investor, over a
The Company’s primary sources of liquidity have been cash contributions from founders or equity capital raised from other investors. As of June 30, 2025, the Company had retained earnings of $
The Company assesses its liquidity in terms of its ability to generate adequate amounts of cash to meet current and future needs. Its expected primary uses of cash on a short and long-term basis are for working capital requirements, capital expenditures, capital contributions to its joint ventures and other general corporate services. The Company’s primary working capital requirements are for project execution activities including purchases of materials, services and payroll which fluctuate during the year, driven primarily by the timing and extent of activities required for new and existing projects. The Company’s management expects that future operating losses and negative operating cash flows may increase from historical levels because of additional costs and expenses related to the development of the Company’s technology and the development of market and strategic relationships with other businesses and customers.
Future capital requirements will depend on many factors, including, the timing and extent of spending by the Company and its joint ventures to support the launch of their product and research and development efforts, the degree to which the Company is successful in launching new business initiatives and the cost associated with these initiatives, the timing and extent of contributions made to the Company’s joint ventures by the other partners and the growth of the Company’s business generally. In March 2024, the Company contributed $
Capital Contribution
Pursuant to the A&R Joint Venture Agreement, the Company is expected to contribute additional capital to the AirJoule JV based on a business plan and annual operating budgets to be agreed between the Company and GE Vernova. During the six months ended June 30, 2025, the Company contributed an additional $
In order to finance future opportunities and associated costs, it is possible that the Company would need to raise additional financing if the proceeds realized to date are insufficient to support its business needs. While management believes that the proceeds realized to
7
date will be sufficient to meet its currently contemplated business needs, there is no guarantee that this will be the case. If additional financing is required by the Company from outside sources, the Company may not be able to raise it on terms acceptable to it or at all. If the Company is unable to raise additional capital on acceptable terms when needed, its product development business, results of operations and financial condition would be materially and adversely affected.
Note 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP, expressed in U.S. dollars. References to GAAP issued by the Financial Accounting Standards Board (“FASB”) in these accompanying notes to the financial statements are to the FASB Accounting Standards Codification (“ASC”). The condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.
Unaudited Interim Condensed Financial Statements
The accompanying unaudited condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with GAAP. Operating results for interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The interim financial statements presented herein do not contain all required disclosures under GAAP for annual financial statements. The accompanying unaudited interim condensed financial statements should be read in conjunction with the annual audited financial statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Principles of Consolidation
Our condensed consolidated financial statements include the accounts of AirJoule Technologies Corporation and its subsidiaries after elimination of all intercompany accounts and transactions. We consolidate all subsidiaries in which we have a controlling financial interest, which includes AirJoule Technologies LLC, a wholly owned subsidiary.
The Company owns a noncontrolling interest in an unconsolidated joint venture with GE Vernova, the AirJoule JV. The investment in the Company’s unconsolidated affiliate is accounted for using the equity method with the Company’s proportionate share of income or loss recognized within equity gain (loss) from investment in AirJoule JV in its condensed consolidated statements of operations. See further discussion of the Company’s unconsolidated affiliate in Note 5 - Equity Method Investment.
Segment Information
The Company’s chief operating decision maker (“CODM”) has been identified as the senior executive committee that includes the . They review the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. The measure of segment performance is based on consolidated net income as reported on the condensed consolidated statement of operations. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period.
8
Some of the more significant estimates include fair values of liabilities associated with the Earnout Shares, True Up Shares and Subject Vesting Shares (as such terms are defined in Note 4 - Recapitalization), fair value of the investment in the AirJoule JV and income taxes. Due to the uncertainty involved in making estimates, actual results could differ from those estimates, which could have a material effect on the financial condition and results of operations in future periods.
Cash, Cash Equivalents and Restricted Cash and Concentration of Credit Risk
The Company considers all highly liquid investments with a weighted average maturity of 90 days or less at the time of purchase to be cash equivalents. The carrying values of cash, cash equivalents and restricted cash approximate their fair values due to the short-term nature of these instruments. As of June 30, 2025 and December 31, 2024, there was $
Deferred Offering Costs
The Company capitalizes certain legal, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs will be netted against gross proceeds.
Business Combinations
The Company evaluates whether acquired net assets should be accounted for as a business combination or an asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, the Company applies its judgment to determine whether the acquired net assets meet the definition of a business by considering if the set includes an acquired input, process and the ability to create outputs.
The Company accounts for business combinations using the acquisition method when it has obtained control. The Company measures goodwill as the fair value of the consideration transferred, including the fair value of any non-controlling interest recognized, less the net recognized amount of the identifiable assets acquired and liabilities combined, all measured at their fair value as of the acquisition date. Transaction costs, other than those associated with the issuance of debt or equity securities, that the Company incurs in connection with a business combination are expensed as incurred.
Any contingent consideration is measured at fair value at the acquisition date. A contingent consideration that does not meet all the criteria for equity classification is required to be recorded at its initial fair value at the acquisition date, and on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified contingent considerations are recognized on the condensed consolidated statements of operations in the period of change.
Equity Method Investment
In accordance with ASC 323, Investments - Equity Method and Joint Ventures, investments in entities over which the Company does not have a controlling financial interest but has significant influence are accounted for using the equity method, with the Company’s share of earnings or losses reported in earnings or losses from equity method investments in the statements of operations. Under the equity method, the Company’s investments are initially measured and recognized using the cost accumulation model following the guidance in ASC 805-50-30, Initial Measurement of Asset Acquisitions. After initial recognition, the condensed consolidated financial statements include the Company’s share of undistributed earnings or losses, and impairment, if any, until the date on which significant influence ceases.
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’ equity (deficit) classification, it is carried in the condensed consolidated balance sheets as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in other
9
non-operating gains (losses) in the condensed 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 condensed 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 purposes. 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 taxes under ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that is included in the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. Management has evaluated the Company’s tax positions, including its previous status as a pass-through entity for federal and state tax purposes, and has determined that the Company has taken no uncertain tax positions that require adjustment to the condensed consolidated financial statements. The Company’s reserve related to uncertain tax positions was
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. Among other provisions, the OBBBA made permanent extensions of certain provisions within the Tax Cuts and Jobs Act and allowance of immediate expensing of qualified research and development expenses. We are evaluating the future impact of the tax law changes on our financial statements.
Research and Development Cost
The Company accounts for research and development cost (“R&D”) in accordance with FASB ASC 730, Research and Development. R&D represents costs incurred in performing research aimed at the discovery of new knowledge and the advancement of techniques to bring significant improvements to products and processes. Costs incurred in developing a product include consulting, engineering, construction and costs incurred to build prototypes.
Fair Value of Financial Instruments
Fair value is the price that would be received to sell an asset, or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company classifies fair value balances based on the observability of those inputs. The three levels of the fair value hierarchy are as follows:
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Level 1 — |
Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. |
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Level 2 — |
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data. |
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Level 3 — |
Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value measurement. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. The Company establishes the fair value of its assets and liabilities using the price that
10
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a fair value hierarchy based on the inputs used to measure fair value. The recorded amounts of certain financial instruments, including accounts payable, accrued expenses, and other current liabilities approximate fair value due to their relatively short maturities. See Note 5 – Equity Method Investment for measurements of the Investment in AirJoule, LLC measured utilizing level 3 inputs as of March 4, 2024. See Note 11 – Fair Value Measurements for measurements of the Earnout Shares, True Up Shares and Subject Vesting Shares, measured utilizing level 3 inputs as of June 30, 2025 and December 31, 2024.
Earnout Shares Liability
In connection with the reverse recapitalization and pursuant to the Merger Agreement, eligible former Legacy Montana Equityholders (as defined below) are entitled to receive additional shares of Common Stock upon the Company achieving certain milestones. See Note 4 – Recapitalization. The settlement of the Earnout Shares to the Legacy Montana Equityholders depends on factors other than just the Company’s stock price. As such, management determined that the Earnout Shares should be classified as a liability and recognized at fair value at each reporting period with changes in fair value included in the condensed consolidated statements of operations.
The Company estimated fair value of the Earnout Shares with a Monte Carlo simulation using a distribution of potential outcomes for expected earnings before interest, taxes, depreciation and amortization (“EBITDA”) and stock price at expected commission dates, utilizing a correlation coefficient for EBITDA and stock price, and assuming $
The Company determined the Earnout Shares associated with employees are accounted for as compensation expense under FASB ASC Topic 718, Share-based Compensation (“ASC 718”). See “Share-Based Compensation” below.
Derivative Financial Instruments and Other Financial Instruments Carried at Fair Value
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments, including the True Up Shares issued in connection with the Subscription Agreement, the Subject Vesting Shares issued in connection with the Business Combination and the Equity Line Obligation liability, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC 815, Derivatives and Hedging (“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 one of the Subscription Agreements do not qualify as equity under ASC 815; therefore, the True Up Shares are required to be classified as a liability and measured at fair value with subsequent changes in fair value recorded in the condensed consolidated statements of operations. The fair value of the derivative liability is discussed in Note 11 — Fair Value Measurements.
The Subject Vesting Shares liability was an assumed liability of XPDB. The Subject Vesting Shares vest and are no longer subject to forfeiture as described in Note 4 – Recapitalization. They do not meet the “fixed-for-fixed” criterion and thus are not considered indexed to the Company’s stock price. 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 the condensed consolidated statements of operations. The estimated fair value of the Subject Vesting Shares 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 $
The Equity Line Obligation liability does not qualify as equity under ASC 815; therefore, the Equity Line Obligation liability is required to be classified as a liability and measured at fair value. The Company will measure the fair value of the Equity Line Obligation liability on a nonrecurring basis as expected changes in the liability will be immaterial to the condensed consolidated financial statements. The Company will recognize at fair value any shares purchased by the Equity Line Investor using the purchase
11
price of the shares on the date of issuance while derecognizing the then-current fair value of the Equity Line Obligation liability and include the associated fair value gain or loss in the condensed consolidated statements of operations as other income (loss). See Note 11 — Fair Value Measurements for further discussion.
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. Once it is probable that the performance condition will be achieved, the Company recognizes stock-based compensation cost over the remaining requisite service period on a graded vesting basis, with a cumulative adjustment for the portion of the service period that occurred for the period prior to the performance condition becoming probable of achievement, if any. Stock-based compensation expense for equity awards that contain market vesting conditions is recognized over the requisite service period commencing on the grant date even if the market condition is not satisfied. 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 grant date fair value of restricted stock units that contain service vesting conditions are estimated based on the fair value of the underlying stock on the grant date. For restricted stock units with market vesting conditions, the fair value is estimated using a Monte Carlo simulation model, which incorporates the likelihood of achieving the market condition.
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 judgments, 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’s share-based compensation. During the period from the date of the Business Combination through June 30, 2025, the Company 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 occurring as of June 30, 2025 was $
Net Income Per Share
Basic net income per share is computed by dividing the net income which is allocated based upon the proportionate amount of weighted average shares outstanding, by each class of stockholder’s stock outstanding during the period. Diluted net income per share is computed by giving effect to all potential shares of common stock, including warrants, stock options, Earnout Shares, True Up Shares, Subject Vesting Shares and restricted stock units (“RSUs”), to the extent dilutive. Stock options and warrants with exercise prices greater than the average market price of the Company’s common stock for the period are excluded from the calculation of diluted net income per share as their inclusion would be anti-dilutive. Additionally, RSUs that vest based on service conditions that have not been achieved as of the end of the period are not included in the computation of basic or diluted earnings per share. Finally, Earnout Shares, True Up Shares and Subject Vesting shares are not included in the calculation of dilutive net income per share if their conditions are not deemed satisfied for issuance as of the reported period. For the three and six months ended June 30, 2025,
For the three months ended June 30, 2025, dilutive shares included in the calculation of net income per share of common stock, utilizing the treasury stock method, were
12
shares of common stock issuable upon the vesting of RSUs. For the three months ended June 30, 2024, dilutive shares included in the calculation of net income per share of common stock, utilizing the treasury stock method, were
For the six months ended June 30, 2025, dilutive shares included in the calculation of net income per share of common stock, utilizing the treasury stock method, were
The net income per share of common stock presented in the condensed consolidated statements of operations is based on the following for the three and six months ended June 30, 2025 and 2024:
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$ |
— |
|
|
$ |
|
|
$ |
|
|||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding |
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Diluted net income per share of common stock |
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
New Accounting Pronouncements
Recently Issued Accounting Standards
The Company is an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i)
13
is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that contractual sale restrictions are not considered in measuring fair value of equity securities and requires additional disclosures for equity securities subject to contractual sale restrictions. The standard is effective for the Company for fiscal years beginning after December 15, 2024. The Company adopted this standard, and it does not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The standard will be effective for the Company for fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its condensed consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The standard is effective for the Company for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its condensed consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The standard is effective for the Company for fiscal years beginning after December 15, 2025. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which clarifies current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a business. The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. The standard is effective for the Company for fiscal years beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its condensed consolidated financial statements and disclosures.
In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer, which is intended to reduce diversity in practice and improve the decision usefulness and operability of the guidance for share-based consideration payable to a customer in conjunction with selling goods or services. The standard is effective for the Company for fiscal years beginning after December 15, 2026. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
Note 4 — RECAPITALIZATION
On June 5, 2023, XPDB and Merger Sub entered into the Merger Agreement with Legacy Montana. On March 14, 2024, pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Montana, with Legacy Montana surviving the Merger as a wholly owned subsidiary of XPDB.
As part of the Business Combination, the holders of Legacy Montana equity securities (the “Legacy Montana Equityholders”) received consideration (the “Merger Consideration”). After giving effect to the conversion of all outstanding Legacy Montana preferred units into Legacy Montana Class B common units, which occurred prior to the effective time of the Merger, the Merger Consideration was paid (i) in the case of holders of Legacy Montana Class B common units and Legacy Montana Class C common units, in the form of newly issued shares of Class A common stock, with a $
14
Closing, collectively owned shares representing at least
Immediately prior to the Closing,
The Legacy Montana Equityholders have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share), and the Company has reserved shares of Class A common stock that may be issuable in the future upon full completion of construction and achievement of operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Legacy Montana’s key components. See Note 11 - Fair Value Measurements for additional information on the Earnout Shares.
Upon the Closing of the Business Combination, and following the conversion of the XPDB Class B common stock to Class A common stock, the sponsor of XPDB beneficially owned
On March 8, 2024, XPDB and an investor entered into a Subscription Agreement pursuant to which XPDB agreed to sell
15
accounted for as a liability recognized at fair value at each reporting period with changes in fair value included in earnings. During the year ended December 31, 2024, the Company’s volume-weighted average price of the Class A common stock on the Nasdaq as reported by Bloomberg L.P. was less than $
As discussed in Note 1 - Organization and Business Operations, the Business Combination was consummated on March 14, 2024, which, for accounting purposes, was treated as the equivalent of Legacy Montana issuing stock for the net assets of XPDB, accompanied by a recapitalization. Under this method of accounting, XPDB was treated as the acquired company for financial accounting and reporting purposes under US GAAP.
Transaction Proceeds
Upon closing of the Business Combination, the Company received gross proceeds of $
Cash-trust and cash, net of redemptions |
|
$ |
|
|
Add: proceeds from PIPE investment |
|
|
|
|
Less: transaction costs and advisory fees, paid |
|
|
( |
) |
Net proceeds from the Business Combination |
|
|
|
|
Less: Subject Vesting Shares liability |
|
|
( |
) |
Less: True Up Shares liability |
|
|
( |
) |
Less: accounts payable and accrued liabilities combined |
|
|
( |
) |
Add: other, net |
|
|
|
|
Reverse recapitalization, net |
|
$ |
( |
) |
The number of shares of Common Stock issued immediately following the consummation of the Business Combination were:
XPDB Class A common stock, outstanding prior to the Business Combination |
|
|
|
|
Less: Redemption of XPDB Class A common stock |
|
|
( |
) |
Class A common stock of XPDB |
|
|
|
|
XPDB Class B common stock, outstanding prior to the Business Combination |
|
|
|
|
PIPE subscription |
|
|
|
|
Business Combination Class A common stock |
|
|
|
|
Legacy Montana Shares |
|
|
|
|
Class A and B Common Stock immediately after the Business Combination |
|
|
|
The number of Legacy Montana shares was determined as follows:
|
|
Legacy Montana |
|
|
The Company’s |
|
||
Class A common stock |
|
|
|
|
|
|
||
Class B common stock |
|
|
|
|
|
|
||
Transaction Costs
During the six months ended June 30, 2024, based on the proceeds received, the Company expensed $
16
Public and private placement warrants
The
Redemption
Prior to the closing of the Business Combination, certain XPDB public shareholders exercised their right to redeem certain of their outstanding shares for cash, resulting in the redemption of
Note 5 — EQUITY METHOD INVESTMENT
AirJoule, LLC
On January 25, 2024, Legacy Montana entered into a Framework Agreement with GE Vernova, a Delaware limited liability company, and, solely for the purposes specified therein, GE Vernova LLC, a Delaware limited liability company (“GE Vernova Parent”), pursuant to which Legacy Montana and GE Vernova agreed, subject to the terms and conditions of the Framework Agreement, including certain closing conditions specified therein, to form a joint venture in which each of Legacy Montana and GE Vernova will hold a
Upon the closing of the transaction on March 4, 2024, (the “JV Closing”), each party to the agreement entered into (i) an amended and restated limited liability company agreement of the AirJoule JV (the “A&R Joint Venture Agreement”), pursuant to which, among other things, the AirJoule JV has the exclusive right to manufacture and supply products incorporating the combined technologies to leading original equipment manufacturers and customers in the Americas, Africa and Australia, (ii) master services agreements, pursuant to which, among other things, each party to the agreement agree to provide certain agreed services to the AirJoule JV for a period of at least
Pursuant to the A&R Joint Venture Agreement, the Company contributed $
The business and affairs of the A&R Joint Venture Agreement shall be managed by a Board of Managers, consisting of two managers (including the chairman) appointed by the Company and two managers appointed by GE Vernova. Following the second anniversary of the JV Closing, if the Board of Managers reach an impasse that cannot be resolved through the process set forth in the A&R Joint Venture Agreement, the A&R Joint Venture Agreement generally provides that the Company may require GE Vernova to sell GE Vernova’s
In the event that a change in applicable laws or regulations has a material adverse effect on GE Vernova’s interest in the AirJoule JV, or GE Vernova determines that the Company fails to meet certain financial performance benchmarks, GE Vernova may require the Company to purchase GE Vernova’s interest for a total purchase price of $
AirJoule, LLC is a variable interest entity for which the Company has determined there is shared power with GE Vernova and therefore accounts for the VIE under the equity method of accounting. The Company considered the power to direct significant activities and obligation to absorb losses or right to receive benefits in assessing whether or not the VIE should be accounting for
17
under the equity method of accounting. Certain assumptions the Company used to reach its conclusion included the lack of reconsideration events, 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 an unconsolidated entity. In addition to $
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 $
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 discount rate. The fair value using the excess earnings valuation method was determined using an estimated weighted average cost of capital of
The Company’s share of the income (loss) reported by AirJoule, LLC are recorded as an equity gain (loss) from investment in AirJoule, LLC in the accompanying condensed consolidated statements of operations.
The following table contains balance sheet information of AirJoule, LLC as of June 30, 2025 and December 31, 2024:
|
|
As of |
|
|
As of |
|
||
Total current assets |
|
$ |
|
|
$ |
|
||
Total non-current assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Total current liabilities |
|
$ |
|
|
$ |
|
||
Total non-current liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Equity |
|
|
|
|
|
|
||
Total liabilities and equity |
|
$ |
|
|
$ |
|
||
AirJoule, LLC tests its intangible assets for impairment during the fourth quarter of each year, or whenever a change in events and circumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The LLC did
Given the uncertain economic times and AirJoule, LLC’s status as an early stage company with limited operating history and the uncertainties regarding AirJoule, LLC’s successful development and commercialization of its products, there can be no assurance that the estimates and assumptions made for purposes of its goodwill impairment testing in 2025 will prove to be accurate predictions of the future. If AirJoule, LLC’s assumptions, including timing of revenue generation and forecasted EBITDA, are not achieved, then AirJoule, LLC may be required to record goodwill impairment charges in future periods.
18
The following table contains statement of operations information of AirJoule, LLC for the three months ended June 30, 2025 and 2024, the six months ended June 30, 2025 and for the period from March 4, 2024 (AirJoule JV inception) to June 30, 2024:
|
Three Months Ended |
|
|
Six Months Ended |
|
|
For the period from |
|
|||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Revenue |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expenses |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income |
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 6 — OTHER ACCRUED EXPENSES
The following table summarizes other accrued expenses:
|
|
As of June 30, |
|
|
As of December 31, |
|
||
Accrued royalty |
|
$ |
|
|
$ |
|
||
Accrued payroll |
|
|
|
|
|
|
||
Professional services |
|
|
|
|
|
|
||
Equity Line Obligation |
|
|
|
|
|
|
||
Accrued other |
|
|
|
|
|
|
||
Total other accrued expenses |
|
$ |
|
|
$ |
|
||
Note 7 — LEASES
As discussed in Note 8 – Related Party Transactions, the Company had a property lease with a related party which terminated on March 14, 2024. Lease expenses under this lease were $
Lease expense for the company’s operating lease was $
At June 30, 2025, approximate future minimum rental payments required under the lease agreement is as follows:
|
|
Operating |
|
|
Remainder of 2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Total undiscounted lease payments |
|
|
|
|
Less: effects of discounting |
|
|
( |
) |
Operating Lease Liability |
|
$ |
|
|
|
|
|
|
|
Classified as: |
|
|
|
|
Operating lease liability, current |
|
$ |
|
|
Operating lease liability, non-current |
|
$ |
|
|
19
Note 8 — RELATED PARTY TRANSACTIONS
Lease Agreement
The Company had a property lease agreement with the Chief Executive Officer as discussed in Note 7 – Leases. The lease agreement was terminated upon close of the Business Combination on
Consultancy Agreement
On January 1, 2019, the Company entered into a consultancy agreement with a company affiliated with the Chief Executive Officer for a monthly payment of $
Office Services Agreement
On October 31, 2020, the Company entered into a consultancy agreement with an affiliate for a monthly payment of $
Due to Related Party
Commencing on December 9, 2021, through the consummation of the initial Business Combination, XPDB agreed to pay affiliates of the sponsor a total of $
In 2023, the sponsor contributed $
Due from Related Party
In November 2024, Legacy Montana executed a statement of work with AirJoule, LLC. Reimbursement of costs incurred during the three months ended June 30, 2025 was $
Related Party Equity Transactions
As described in Note 9 – Stockholders’ Equity, Legacy Montana sold equity interests that subsequently converted into shares of Class A common stock, to TEP Montana, LLC (“TEP Montana”). The Executive Chairman of the Company is the managing partner of the managing member of TEP Montana.
The Company granted awards to the employees of AirJoule, LLC during the six months ended June 30, 2025. The number of awards granted to the employees of AirJoule, LLC are found in Note 10 – Share-Based Compensation.
Note 9 — STOCKHOLDERS’ EQUITY
Warrants
In January, February and March 2024, 14 warrant holders of Legacy Montana exercised their warrants to purchase a total of
As part of XPDB’s initial public offering (“IPO”), XPDB issued
20
investors exercised their Public Warrants on a cashless basis for a total of
As of June 30, 2025, there are
The Private Placement Warrants (including the common stock issuable upon exercise of the Private Placement Warrants) were not transferable, assignable or saleable until 30 days after the consummation of the Business Combination (except, among other limited exceptions, to the Company’s officers and directors and other persons or entities affiliated with the XPDB’s sponsor and anchor investors) and they will not be redeemable by the Company. The Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period, except that the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable.
If holders of the Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of the Company’s common stock equal to the quotient obtained by dividing (x) the product of the number of shares of the Company’s common stock underlying the warrants multiplied by the excess of the 10 day average closing price (defined below) as of the date prior to the date on which notice of exercise is sent or given to the warrant agent, less the warrant exercise price by (y) the 10 day average closing price. The 10 day average closing price means, as of any date, the average last reported sale price (defined below) of the shares of the Company’s common stock as reported during the 10 trading day period ending on the trading day prior to such date. Last reported sale price means the last reported sale price of the Company’s common stock on the date on which the notice of exercise of the warrant is sent to the warrant agent.
These Public Warrants expire on the fifth anniversary of the Business Combination or earlier upon redemption or liquidation and are exercisable commencing 30 days after the Business Combination, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder.
Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants:
The Company accounts for the warrants issued in connection with the IPO in accordance with the guidance contained in ASC 815. Such guidance provides that the warrants described above are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity.
Subscription Agreements
During the year ended December 31, 2024, the Company entered into subscription agreements with various investors (the “Subscription Agreements”), which brought in approximately $
During the three months ended June 30, 2025, the Company entered into the April 2025 PIPE Subscription Agreements with the April 2025 PIPE Investors, pursuant to which, among other things, the April 2025 PIPE Investors agreed to subscribe for and purchase from
21
the Company, and the Company agreed to issue and sell to the April 2025 PIPE Investors, an aggregate of
Equity Financing
Legacy Montana completed a preferred equity financing during February 2023 with TEP Montana, and issued
Note 10 — SHARE-BASED COMPENSATION
Legacy Montana Options
On April 5, 2023, Legacy Montana granted
In January, February and March 2024, 13 Legacy Montana option holders exercised their options to purchase a total of
In September 2024, three Legacy Montana option holders exercised their options to purchase a total of
In the three months ended December 31, 2024, three Legacy Montana option holders exercised their options to purchase a total of
In the three months ended March 31, 2025, four Legacy Montana option holders exercised their options to purchase a total of
In the three months ended June 30, 2025, two Legacy Montana option holders exercised their options to purchase a total of
As of June 30, 2025, of the
2024 Incentive Award Plan
On March 8, 2024, the holders of XPDB common stock considered and approved the Montana Technologies Corporation’s 2024 Incentive Award Plan (the “Incentive Plan”), which became effective immediately upon the Closing on March 14, 2024. Under the Incentive Plan, the Company may grant equity and equity-based awards to certain employees, consultants and non-employee directors award, such as, (a) Incentive Stock Options (granted to employees only), (b) Non-Qualified Stock Options (“NSOs”), (c) Stock Appreciation Rights, (d) Restricted Stock Units, (e) Restricted Stock, (f) dividend equivalents and (g) other stock and cash-based awards of the Company (“Incentive Awards”). The sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with ASC 718, or any successor thereto) of awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year of the Company may not exceed $
2024 Employee Stock Purchase Plan
The 2024 Employee Stock Purchase Plan (the “2024 ESPP”) became effective immediately upon the Closing on March 14, 2024 and as of June 30, 2025, a total of
22
purchase period. The 2024 ESPP share reserve automatically increases on January 1st of each calendar year, for ten years, commencing on January 1, 2025, in an amount equal to
The Company recorded share-based compensation expense in the following expense categories of its accompanying unaudited condensed consolidated statements of operations during the three and six months ended June 30, 2025 and 2024.
|
|
Three Months Ended |
|
|
Six Months Ended |
||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
General and administrative |
$ |
|
$ |
|
$ |
|
$ |
||||
Research and development |
|
|
|
|
|
|
|
||||
Total share-based compensation |
$ |
|
$ |
|
$ |
|
$ |
||||
Stock Options
The following table summarizes stock option activity for the six months ended June 30, 2025:
|
|
Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Life (Years) |
|
|||
Balance at December 31, 2024 |
|
|
|
$ |
|
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Balance at June 30, 2025 |
|
|
|
$ |
|
|
|
|
|
|||
Vested and expected to vest |
|
|
|
$ |
|
|
|
|
|
|||
Exercisable at the end of the period |
|
|
|
$ |
|
|
|
|
|
|||
There were
Restricted Stock Units with Service-Only Conditions
The following table summarizes RSU with Service-Only Conditions activity for the six months ended June 30, 2025:
|
|
Awards |
|
|
Weighted Average Grant Date Fair Value |
|
||
Balance at December 31, 2024 |
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
|
|
||
Released |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Balance at June 30, 2025 |
|
|
|
$ |
|
|
||
The Company recognized $
23
2025 consisted of
Restricted Stock Units with Market-Based Conditions
The following table summarizes RSU with Market-Based Conditions activity for the six months ended June 30, 2025:
|
|
Awards |
|
|
Weighted Average Grant Date Fair Value |
|
||
Balance at December 31, 2024 |
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
|
|
||
Released |
|
|
|
|
|
|
||
Forfeited |
|
|
|
|
|
|
||
Balance at June 30, 2025 |
|
|
|
$ |
|
|
||
The Company recognized $
The Company records expense ratably over the requisite service period, with expense determined based on the grant date fair value regardless of whether the market condition is satisfied because the awards are subject to market conditions. These awards that remain subject to market conditions are reflected at the target level, which is consistent with how expense will be recorded, regardless of the numbers of shares that are expected to be earned. The grant date fair value of the awards granted is established using the Monte Carlo simulation model.
RSUs - Market-Based Conditions |
|
|
|
|
Expected term - years |
|
|
|
|
Expected volatility |
|
|
% |
|
Risk-free interest rate |
|
|
% |
|
Expected dividends |
|
|
|
|
Restricted Stock Units with Performance-Based Conditions
The following table summarizes RSU with Performance-Based Conditions activity for the six months ended June 30, 2025:
|
|
Awards |
|
|
Weighted Average Grant Date Fair Value |
|
||
Balance at December 31, 2024 |
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
|
|
||
Released |
|
|
|
|
|
|
||
Forfeited |
|
|
|
|
|
|
||
Balance at June 30, 2025 |
|
|
|
$ |
|
|
||
These awards vest subject to certain performance-based conditions. The Company recognized $
24
Note 11 — FAIR VALUE MEASUREMENTS
Items Measured at Fair Value on a Recurring Basis:
The Company accounts for certain liabilities at fair value on a recurring basis and classifies these liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3). Assumptions such as risk-free rate, stock price, volatility and discount rate were based on market data. Management used a single point estimate for the risk-free rate, volatility and discount rate.
Liabilities subject to fair value measurements that are valued on a recurring basis are as follows:
|
|
As of June 30, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnout Shares liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Subject Vesting Shares liability |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Earnout Shares
The Legacy Montana Equityholders have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) through the Earnout Shares. The maximum value of the Earnout Shares is capped at $
If the conditions for payment of the Earnout Shares are satisfied and assuming all originally designated employees are then still providing services to the Post-Combination Company on the date such condition is met, approximately
The settlement of the Earnout Shares to the holders of Legacy Montana common units contains variations in something other than the fair value of the issuer’s equity shares. As such, management determined that they should be classified as a liability and recognized at fair value at each reporting period with changes in fair value included in earnings. The Earnout Shares are subject to ASC 718 and are accounted for as post-combination compensation cost.
25
The estimated fair value of the Earnout Shares was determined with a Monte Carlo simulation using a distribution of potential outcomes for expected EBITDA and stock price at expected commission dates, utilizing a correlation coefficient for EBITDA and stock price, and assuming $
|
|
As of |
|
|
As of |
|
||
Stock Price |
|
$ |
|
|
$ |
|
||
Volatility |
|
|
% |
|
|
% |
||
Risk free rate of return |
|
|
% |
|
|
% |
||
Discount rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|
||
The following table presents the changes in the fair value of the Earnout Shares liability:
|
|
Six Months Ended |
|
|
Earnout Shares liability as of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
Balance as of March 31, 2025 |
|
|
|
|
Change in fair value |
|
|
( |
) |
Balance as of June 30, 2025 |
|
$ |
|
|
As of June 30, 2025 and December 31, 2024, the estimated fair value of all the Earnout Shares, $
True Up Shares liability
As discussed in Note 4 - Recapitalization, on March 8, 2024, XPDB and an investor entered into a Subscription Agreement pursuant to which XPDB agreed to sell
The estimated fair value of the true up 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 True Up Shares considered the 15-day average price over the one-year period following the Closing Date.
26
Subject Vesting Shares liability
In connection with the execution of the Merger Agreement and pursuant to the terms of the sponsor support agreement (the “Sponsor Support Agreement”) entered into among the XPDB sponsor (the “Sponsor”), XPDB, Legacy Montana and other holders of XPDB’s Class B common stock, $
In addition, pursuant to the terms of the Sponsor Support Agreement, the Sponsor (i) agreed to waive its redemption rights with respect to any Sponsor Securities in connection with the completion of a Business Combination (which waiver was provided in connection with the IPO and without any separate consideration paid in connection with providing such waiver), (ii) agreed not to transfer any public shares and founder shares held by it during the time prior to Closing or the termination of the Merger Agreement, (iii) agreed to waive anti-dilution protections and (iv) and agreed to subject certain of the shares of Combined Company Class A common stock held by Sponsor following the conversion of the founder shares as of the Closing to certain vesting provisions. Specifically, and as described above in Note 4 – Recapitalization, the Sponsor Support Agreement provides that as of immediately prior to (but subject to) the Closing, the Subject Vesting Shares will be subject to an earnout, with the Subject Vesting Shares vesting during the period beginning on the date of Closing and ending five (5) years following the date of Closing (i) simultaneously with the issuance of the Earnout Shares made to the Legacy Montana Equityholders in a proportionate amount to the payment achieved in relation to the maximum issuance of Earnout Shares of equity interests of $
The following table presents the changes in the fair value of the Subject Vesting Shares liability:
|
|
Six Months Ended |
|
|
Earnout Shares liability as of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
Balance as of March 31, 2025 |
|
|
|
|
Change in fair value |
|
|
( |
) |
Balance as of June 30, 2025 |
|
$ |
|
|
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 $
Items Measured at Fair Value on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a nonrecurring basis, which are not included in the tables above. These assets and liabilities include our Investment in AirJoule, LLC and Equity Line Obligation liability, respectively. As these nonrecurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For further information of our Investment in AirJoule, LLC see Note 5 – Equity Method Investment.
27
Note 12 — COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal matters arising in the normal course of business. In the opinion of the Company’s management and legal counsel, the amount of losses that may be sustained, if any, would not have a material effect on the financial position and results of operations of the Company.
Risks and Uncertainties
The Company, as an early-stage business without any current operations, product sales or revenue, has historically been dependent upon the sourcing of external capital to fund its overhead and product development costs. This is a typical situation for any early-stage company without product sales.
Royalties
In October 2021, the Company entered into a patent license agreement with a third party whereby the third party granted us rights to use certain of their patents in exchange for an upfront payment and royalties based on a percentage of net sales until such patents expire. In connection with this, the Company agreed to a minimum royalty amount of which $
Joint Venture Agreement
On October 27, 2021, Legacy Montana entered into a joint venture with CATL US Inc. (“CATL US”), an affiliate of CATL, pursuant to which we and CATL US formed CAMT Climate Solutions Ltd., a limited liability company organized under the laws of Hong Kong (“CAMT”). Legacy Montana and CATL US both own
Pursuant to the Amended and Restated Joint Venture Agreement for CAMT, entered into on September 29, 2023, Legacy Montana and CATL US have each agreed to contribute $
The purpose of Legacy Montana’s joint venture with CATL US is to commercialize the AirJoule technology in Asia and Europe and, pursuant to the Amended and Restated Joint Venture Agreement for CAMT, CAMT has the exclusive right to commercialize our AirJoule technology in those territories. Subject to the oversight of CAMT’s board, CATL US is responsible for managing the day-to-day operations of CAMT (including the nomination and replacement of the Chief Executive Officer of CAMT,) and is responsible for providing CAMT and any subsidiaries formed by CAMT with, among other things, administrative services, supply chain support, assistance in obtaining required permits and approvals and assistance in purchasing or leasing land and equipment. The Company’s financial statements do not reflect any accounting for CAMT as no assets (including IP) or cash have been contributed to CAMT and there has been no activity as of June 30, 2025.
Letter Agreement
On January 7, 2024, Legacy Montana entered into a letter agreement (the “Letter Agreement”) with XPDB and Carrier Corporation, an affiliate of Carrier Global Corporation (NYSE: CARR), a global leader in intelligent climate and energy solutions (collectively with its affiliates, “Carrier”), pursuant to which Carrier, XPDB and the Company agreed, among other things, to provide Carrier the right to nominate one (1) designee, subject to the approval of the Company, for election to the board of directors for so long as Carrier satisfies certain investment conditions, following the Business Combination. Pursuant to the terms of the agreement, Carrier has nominated its director.
28
Note 13 — SEGMENT INFORMATION
The following table reconciles segment profit or loss to consolidated net income on the condensed consolidated statements of operations:
|
|
Three Months Ended |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Interest income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Gain on contribution to AirJoule, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in fair value of liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction costs incurred in connection with business combination |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense (benefit) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Other segment items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment net income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
The following table reconciles segment assets to consolidated assets on the condensed consolidated balance sheets:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Investment in AirJoule, LLC |
$ |
|
|
$ |
|
|
||
Other segment assets (1) |
|
|
|
|
|
|
||
Segment assets |
|
|
|
|
|
|
||
Adjustments and reconciling items |
|
|
|
|
|
|
||
Consolidated assets |
$ |
|
|
$ |
|
|
||
Note 14 — SUBSEQUENT EVENTS
Capital Contribution
On April 25, 2025, the Company entered into the Second Amended and Restated Limited Liability Company Agreement of AirJoule, LLC (the “Amended LLC Agreement”), by and among the Company, GE Vernova and AirJoule, LLC. Pursuant to the Amended LLC Agreement, the Company is expected to contribute additional capital to the AirJoule JV based on a business plan and annual operating budgets to be agreed between the Company and GE Vernova. In July 2025, the Company contributed an additional $
29
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q, as well as the audited financial statements, notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.
This discussion includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included herein. Factors that might cause or contribute to such a discrepancy include, but are not limited to: our status as an early stage company with limited operating history, which may make it difficult to evaluate the prospects for our future viability; our initial dependence on revenue generated from a single product; significant barriers we face to deploy our technology; the dependence of our commercialization strategy on our relationship with third parties; our history of losses; accuracy of assumptions underlying projections related to our equity method goodwill impairment testing; and other risks and uncertainties described in our other SEC filings.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business Combination (as defined below), the business and operations of AirJoule Technologies Corporation, formerly known as Montana Technologies Corporation and its consolidated subsidiaries, and (ii) prior to the Business Combination, AirJoule Technologies LLC, formerly known as Montana Technologies LLC, or Legacy Montana, and its consolidated subsidiaries.
Company Overview
We are an advanced technology company whose purpose is to free the world from its water and energy constraints by delivering groundbreaking sorption technologies. AirJoule is the leading technology platform that unleashes the power of water from air. AirJoule produces pure distilled water from air, and our proprietary AirJoule platform, at commercial scale, will mitigate water scarcity through distributed water generation for businesses and consumers around the world. Our products are especially valuable for industrial users, which generate significant amounts of waste heat that can be used to power our sorption technologies to produce low cost pure distilled water and dehumidified air – two key inputs for a variety of industrial activities, including data centers and advanced manufacturing. In HVAC applications, AirJoule is designed to reduce energy consumption, minimize or even eliminate the use of environmentally-harmful refrigerants, and generate material cost efficiencies for air conditioning systems. We are focused on commercialization and scaling manufacturing of our AirJoule products through our global collaborations, including with GE Vernova and Carrier, and we believe that deploying AirJoule units worldwide will serve our purpose of freeing the world of its water and energy constraints. We plan to manufacture initial AirJoule systems capable of producing more than 1,000 liters per day in 2025, which we intend to use for customer demonstrations, and we expect to scale capacities for commercial sales in 2026.
Growth Strategy and Outlook
We anticipate significant growth opportunities by offering AirJoule in global markets where demand for water, dehumidified air and cooling are highest. With our technology platform, we believe that we are uniquely positioned to provide curated solutions that satisfy our customers’ needs and expectations in fast-growing and water and energy-intensive industries, such as data centers and advanced manufacturing, along with military and HVAC applications. We estimate the combined total addressable market to be approximately $450 billion.
In the data center arena, we aim to address escalating energy and water efficiency challenges associated with increased computing density by using low-grade waste heat to produce pure distilled water and enabling data center operators to reduce their cooling costs and improve water sustainability. Similarly, in advanced manufacturing environments, where product quality and process precision hinge on consistent humidity and ultra-pure water, AirJoule can help customers with cost-effective dehumidification. The military sector presents a distinct opportunity, as AirJoule is able to operate in a variety of climate conditions to support troops in remote and water-scarce environments, ensuring mission readiness and resilience. In the HVAC space, where building owners and facility managers are under pressure to cut energy consumption and improve indoor air quality, AirJoule’s superior moisture removal capability will reduce power consumption and the use of refrigerants in air conditioning systems.
30
To accelerate market penetration and scale our manufacturing capabilities, we plan to leverage our strategic partnerships. These partnerships offer access to industry-specific R&D expertise, mature supply chains, established sales channels and extensive service networks, allowing us to quickly move from pilot deployments to full-scale commercialization. We intend to co-develop sector-specific solutions, capitalizing on our partners’ market insights and reputational strength to better serve diverse customer needs. By combining our innovative AirJoule technology with their global reach and operational expertise, we will unlock value across multiple industries, establish our position as a leader in water-focused solutions and deliver long-term growth and value to our shareholders.
Recent Developments
The April 2025 PIPE
On April 23, 2025, we entered into the April 2025 PIPE Subscription Agreements with the April 2025 PIPE Investors, pursuant to which, among other things, the April 2025 PIPE Investors agreed to subscribe for and purchase from the Company, and we agreed to issue and sell to the April 2025 PIPE Investors, an aggregate of 3,775,126 newly issued shares of Class A common stock at a purchase price of $3.98 per share on the terms and subject to the conditions set forth therein. The April 2025 PIPE Subscription Agreements entitled the April 2025 PIPE Investors to shelf registration rights with respect to the shares of Class A common stock they purchased. The transaction closed on April 25, 2025, and the shares of Class A common stock were issued and sold to the April 2025 PIPE Investors in reliance on Section 4(a)(2) of the Securities Act.
Committed Equity Facility
On March 25, 2025, we entered into the Equity Line Purchase Agreement, with the Equity Line Investor. Under the terms and subject to the conditions of the Equity Line Purchase Agreement, the Company has the right, but not the obligation, to sell to the Equity Line Investor, over a 36-month period, up to an aggregate of $30,000,000 of our newly issued shares of common stock subject to certain conditions and limitations contained in the Equity Line Purchase Agreement, including that we may issue no more than the number of shares equal to 19.99% of the aggregate number of our issued and outstanding shares of common stock as of immediately prior to the execution of the Equity Line Purchase Agreement without first obtaining stockholder approval. As of June 30, 2025, sales under the Equity Line Purchase Agreement had not yet commenced.
The Amended LLC Agreement
On April 25, 2025, we entered into the Amended LLC Agreement, pursuant to which we expected to contribute additional capital to the AirJoule JV based on a business plan and annual operating budgets to be agreed between us and GE Vernova. In July 2025, we contributed an additional $2.75 million in capital contributions to the AirJoule JV.
Components of Our Results of Operations
Revenue
We anticipate that we will earn revenue from the sale of various key components that will be used in the assembly of AirJoule systems. As of June 30, 2025, no revenue has been earned from our operations.
Operating Expenses
We classify our operating expenses into the following categories:
31
Results of Operations
The following tables set forth the results of our operations for the periods presented, as well as the changes between periods. The period-to-period comparison of financial results is not necessarily indicative of future results.
The three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024
The following table sets forth the Company’s condensed consolidated statements of operations data for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
Change ($) |
|
|
2025 |
|
|
2024 |
|
|
Change ($) |
|
||||||
Cost and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
General and administrative |
|
$ |
3,751,211 |
|
|
$ |
3,211,205 |
|
|
$ |
540,006 |
|
|
$ |
6,537,695 |
|
|
$ |
4,024,444 |
|
|
$ |
2,513,251 |
|
Research and development |
|
|
401,623 |
|
|
|
1,050,804 |
|
|
|
(649,181 |
) |
|
|
789,542 |
|
|
|
1,896,961 |
|
|
|
(1,107,419 |
) |
Sales and marketing |
|
|
7,794 |
|
|
|
74,841 |
|
|
|
(67,047 |
) |
|
|
22,003 |
|
|
|
112,566 |
|
|
|
(90,563 |
) |
Transaction costs incurred in connection with business combination |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
54,693,103 |
|
|
|
(54,693,103 |
) |
Depreciation and amortization |
|
|
2,289 |
|
|
|
1,216 |
|
|
|
1,073 |
|
|
|
3,877 |
|
|
|
2,301 |
|
|
|
1,576 |
|
Loss from operations |
|
|
(4,162,917 |
) |
|
|
(4,338,066 |
) |
|
|
175,149 |
|
|
|
(7,353,117 |
) |
|
|
(60,729,375 |
) |
|
|
53,376,258 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income |
|
|
283,733 |
|
|
|
216,480 |
|
|
|
67,253 |
|
|
|
526,758 |
|
|
|
242,626 |
|
|
|
284,132 |
|
Gain on contribution to AirJoule, LLC |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
333,500,000 |
|
|
|
(333,500,000 |
) |
Equity loss from investment in AirJoule, LLC |
|
|
(2,089,667 |
) |
|
|
(580,788 |
) |
|
|
(1,508,879 |
) |
|
|
(4,319,945 |
) |
|
|
(607,170 |
) |
|
|
(3,712,775 |
) |
Change in fair value of Earnout Shares liability |
|
|
6,276,000 |
|
|
|
13,064,000 |
|
|
|
(6,788,000 |
) |
|
|
19,108,000 |
|
|
|
5,392,000 |
|
|
|
13,716,000 |
|
Change in fair value of True Up Shares liability |
|
|
— |
|
|
|
(136,000 |
) |
|
|
136,000 |
|
|
|
106,106 |
|
|
|
133,000 |
|
|
|
(26,894 |
) |
Change in fair value of Subject Vesting Shares liability |
|
|
934,000 |
|
|
|
1,759,000 |
|
|
|
(825,000 |
) |
|
|
6,408,000 |
|
|
|
(666,000 |
) |
|
|
7,074,000 |
|
Gain on settlement of legal fees |
|
|
— |
|
|
|
2,207,445 |
|
|
|
(2,207,445 |
) |
|
|
— |
|
|
|
2,207,445 |
|
|
|
(2,207,445 |
) |
Other expense, net |
|
|
(286,818 |
) |
|
|
— |
|
|
|
(286,818 |
) |
|
|
(285,470 |
) |
|
|
— |
|
|
|
(285,470 |
) |
Total other income, net |
|
|
5,117,248 |
|
|
|
16,530,137 |
|
|
|
(11,412,889 |
) |
|
|
21,543,449 |
|
|
|
340,201,901 |
|
|
|
(318,658,452 |
) |
Income before income taxes |
|
|
954,331 |
|
|
|
12,192,071 |
|
|
|
(11,237,740 |
) |
|
|
14,190,332 |
|
|
|
279,472,526 |
|
|
|
(265,282,194 |
) |
Income tax benefit (expense) |
|
|
1,558,882 |
|
|
|
1,237,824 |
|
|
|
321,058 |
|
|
|
3,201,539 |
|
|
|
(84,487,339 |
) |
|
|
87,688,878 |
|
Net income |
|
$ |
2,513,213 |
|
|
$ |
13,429,895 |
|
|
$ |
(10,916,682 |
) |
|
$ |
17,391,871 |
|
|
$ |
194,985,187 |
|
|
$ |
(177,593,316 |
) |
General and Administrative
General and administrative expenses for the three months ended June 30, 2025 were $3.8 million as compared to $3.2 million for the three months ended June 30, 2024. The $0.5 million increase was primarily related to a $1.4 million increase in share-based compensation expense, a $0.4 million increase in professional services and a $0.3 million increase in salaries and benefits as a result of an increased headcount offset by a $0.6 million decrease in audit and legal fees, a $0.6 million decrease in expenses related to public company activity including insurance, director fees and licensing fees and the reimbursement of costs incurred per the statement of work with AirJoule, LLC of $0.4 million. We expect that our general and administrative expenses will increase in future periods commensurate with the expected growth of our business and increased expenditures associated with our status as an exchange-listed public company.
General and administrative expenses for the six months ended June 30, 2025 were $6.5 million as compared to $4.0 million for the six months ended June 30, 2024. The $2.5 million increase was primarily related to a $2.4 million increase in share-based compensation
32
expense, a $1.3 million increase in salaries and benefits as a result of an increased headcount and a $0.6 million increase in other expenses related to public company activity offset by a $0.6 million decrease in audit and legal fees, a $0.2 million decrease in professional services, a $0.2 million decrease in licensing fees and the reimbursement of costs incurred per the statement of work with AirJoule, LLC of $0.8 million. We expect that our general and administrative expenses will increase in future periods commensurate with the expected growth of our business and increased expenditures associated with our status as an exchange-listed public company.
Research and Development
Research and development expenses for the three months ended June 30, 2025 were $0.4 million as compared to $1.1 million for the three months ended June 30, 2024. The $0.6 million decrease in research and development was primarily related to a $0.2 million increase in share-based compensation and salaries and benefits as a result of an increased headcount offset by a $0.6 million decrease in purchasing of research and development materials, patent fees and consulting services and the reimbursement of costs incurred per the statement of work with AirJoule, LLC of $0.1 million.
Research and development expenses for the six months ended June 30, 2025 were $0.8 million as compared to $1.9 million for the six months ended June 30, 2024. The $1.1 million decrease in research and development was primarily related to a $0.3 million increase in share-based compensation and salaries and benefits as a result of an increased headcount offset by a $1.1 million decrease in purchasing of research and development materials, patent fees and consulting services and the reimbursement of costs incurred per the statement of work with AirJoule, LLC of $0.3 million.
Sales and Marketing
Sales and marketing expenses for the three months ended June 30, 2025 were $7,794 as compared to $74,841 for the three months ended June 30, 2024.
Sales and marketing expenses for the six months ended June 30, 2025 were $22,003 as compared to $112,566 for the six months ended June 30, 2024.
Transaction Costs Incurred in Connection with Business Combination
Transaction costs incurred in connection with the business combination include the non-cash recognition of earnout liabilities of approximately $53.7 million and transaction costs incurred by Legacy Montana of approximately $1.0 million, which were paid in 2024.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended June 30, 2025 and 2024 was $2,289 and $1,216, respectively.
Depreciation and amortization expense for the six months ended June 30, 2025 and 2024 was $3,877 and $2,301, respectively.
Interest Income
Interest income was $283,733 and $216,480 for the three months ended June 30, 2025 and 2024, respectively. This is primarily a result of the increase in our cash balance.
Interest income was $526,758 and $242,626 for the six months ended June 30, 2025 and 2024, respectively. This is primarily a result of the increase in our cash balance.
Gain on Contribution to AirJoule, LLC
An equity method investment received in exchange for noncash consideration is measured at fair value. As a result, during the three and six months ended June 30, 2024, we recognized a gain of $333.5 million on the contribution to AirJoule, LLC for the difference between our zero carrying value and the fair value of the perpetual license to intellectual property that we transferred to AirJoule, LLC.
We determined the fair value of the intellectual property by applying the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to forecasted revenue growth rate and customer attrition rate, Level 3 measurements. Valuation specialists were used to develop and evaluate the appropriateness of the multi-period excess earnings method, our discount rates, attrition rate and fair value estimates using its cash flow projections.
33
Equity Loss from Investment in AirJoule, LLC
As previously noted, on January 25, 2024, Legacy Montana entered into a joint venture with GE Vernova, the AirJoule JV which closed on March 4, 2024. For the three months ended June 30, 2025 and 2024, we recognized a loss of $2.1 million and $0.6 million, respectively from our 50% equity investment in the AirJoule JV. For the six months ended June 30, 2025 and 2024, we recognized a loss of $4.3 million and $0.6 million, respectively from our 50% equity investment in the AirJoule JV.
Change in Fair value of Earnout Shares Liability
Upon consummation of the Business Combination, we expensed approximately $53.7 million in Earnout Shares liability. The change in fair value of $6.3 million and $13.1 million for the three months ended June 30, 2025 and 2024, respectively, and $19.1 million and $5.4 million for the six months ended June 30, 2025 and 2024, respectively, is primarily due to a decrease in the estimated fair value of the liability and is recognized as gains in the condensed consolidated statements of operations. The fair value of the liability decreased primarily due changes in the valuation inputs, mainly a decrease in the stock price, changes in the timing of expected future cash flows and an increase in the volatility.
Change in Fair value of True Up Shares Liability
Upon consummation of the Business Combination, we assumed approximately $0.6 million in earnout true up shares liability. The change in fair value of the liability during the three and six months ended June 30, 2025 is primarily due to the triggering event and issuance of Class A common stock.
Change in Fair value of Subject Vesting Shares Liability
Upon consummation of the Business Combination, we assumed approximately $11.8 million for the subject vesting shares liability. The change in fair value of income of $0.9 million and $1.8 million during the three months ended June 30, 2025 and 2024, respectively, and $6.4 million and $(0.7) million during the six months ended June 30, 2025 and 2024, respectively is primarily due to a decrease in the estimated fair value of the liability recognized as a gain (loss) in the condensed consolidated statements of operations. The fair value of the liability decreased primarily due changes in the valuation inputs, mainly a decrease in the stock price, changes in the timing of expected future cash flows and an increase in the volatility.
Income Tax Benefit (Expense)
For the three months ended June 30, 2025 and 2024, income tax benefit was $1.6 million and $1.2 million, respectively. For the six months ended June 30, 2025 and 2024, income tax benefit (expense) was $3.2 million and $(84.5) million, respectively. During the three and six months ended June 30, 2024, our contribution of a perpetual license to AirJoule, LLC’s intellectual property was measured at fair value resulted in a book gain and a temporary difference between book and taxable income. The temporary difference resulted in the recognition of a deferred tax expense and deferred tax liabilities of approximately $87.8 million. This expense was partially offset by the recognition of deferred tax assets in connection with the Company now being a corporation through the Business Combination.
Liquidity and Capital Resources
The April 2025 PIPE
On April 23, 2025, we entered into the April 2025 PIPE Subscription Agreements with the April 2025 PIPE Investors pursuant to which, among other things, the April 2025 PIPE Investors agreed to subscribe for and purchase from the Company, and we agreed to issue and sell to the April 2025 PIPE Investors, an aggregate of 3,775,126 newly issued shares of Class A common stock at a purchase price of $3.98 per share on the terms and subject to the conditions set forth therein. The April 2025 PIPE Subscription Agreements entitled the April 2025 PIPE Investors to shelf registration rights with respect to the shares of Class A common stock they purchased. The transaction closed on April 25, 2025, and the shares of Class A common stock were issued and sold to the April 2025 PIPE Investors in reliance on Section 4(a)(2) of the Securities Act.
Committed Equity Facility
On March 25, 2025, we entered into the Equity Line Purchase Agreement with the Equity Line Investor. Under the terms and subject to the conditions of the Equity Line Purchase Agreement, the Company has the right, but not the obligation, to sell to the Equity Line Investor, over a 36-month period, up to an aggregate of $30,000,000 of our newly issued shares of common stock subject to certain conditions and limitations contained in the Equity Line Purchase Agreement, including that we may issue no more than the number of shares equal to 19.99% of the aggregate number of our issued and outstanding shares of common stock as of immediately prior to the
34
execution of the Equity Line Purchase Agreement without first obtaining stockholder approval. As of June 30, 2025, sales under the Equity Line Purchase Agreement had not yet commenced.
Capital Contribution
Pursuant to the A&R Joint Venture Agreement, we are expected to contribute additional capital to the AirJoule JV based on a business plan and annual operating budgets to be agreed between us and GE Vernova. During the six months ended June 30, 2025, we contributed an additional $10.0 million in capital contributions to the AirJoule JV.
General
Our primary sources of liquidity have been cash from contributions from founders or equity capital raised from other investors. We had retained earnings of approximately $215.9 million as of June 30, 2025. As of June 30, 2025, we had $29.5 million of working capital including $30.5 million in cash, cash equivalents and restricted cash.
We assess liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses of cash on a short and long-term basis are for working capital requirements, capital expenditures and other general corporate services. Our primary working capital requirements are for project execution activities including purchases of materials, services and payroll which fluctuate during the year, driven primarily by the timing and extent of activities required for new and existing projects. Management expects that future operating losses and negative operating cash flows may increase from historical levels because of additional costs and expenses related to the development of its technology and the development of market and strategic relationships with other businesses and customers.
Our future capital requirements will depend on many factors, including the timing and extent of spending to support the launch of our product and research and development efforts, the degree to which we are successful in launching new business initiatives and the cost associated with these initiatives and the growth of our business generally. Pursuant to the A&R Joint Venture Agreement, we contributed $10 million in cash to the AirJoule JV at the JV closing and in June 2024, GE Vernova contributed $100 to the AirJoule JV. Pursuant to the A&R Joint Venture Agreement, we agreed to make additional capital contributions to the AirJoule JV based on a business plan and annual operating budgets to be agreed between the Company and GE Vernova, and our remaining commitment for capital contributions to the AirJoule JV is $85.0 million as of June 30, 2025. In general, for the first six years, GE Vernova has the right, but not the obligation, to make capital contributions to the AirJoule JV.
In order to finance these opportunities and associated costs, it is possible that we would need to raise additional financing if the proceeds realized to date are insufficient to support our business needs. While we believe that the proceeds realized to date will be sufficient to meet our currently contemplated business needs, management cannot assure that this will be the case. If additional financing is required by us from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital on acceptable terms when needed, our product development business, results of operations and financial condition would be materially and adversely affected.
Cash flows for the six months ended June 30, 2025 and 2024
The following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30, 2025 and 2024:
|
|
For the Six Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
|
(2,163,485 |
) |
|
|
(17,576,561 |
) |
Net cash used in investing activities |
|
|
(10,011,376 |
) |
|
|
(10,006,554 |
) |
Net cash provided by financing activities |
|
|
14,655,824 |
|
|
|
61,855,930 |
|
Net increase in cash and cash equivalents |
|
|
2,480,963 |
|
|
|
34,272,815 |
|
Cash Flows from Operating Activities
During the six months ended June 30, 2025, net cash used in operating activities was $2.2 million and primarily reflected our net income of $17.3 million, a $4.3 million equity loss from our investment in AirJoule, LLC and a $2.2 million increase in our operating assets and liabilities offset by net noncash operating activities of $25.3 million of changes in fair value of our Earnout, True Up, Subject Vesting shares and Equity Line Obligation liabilities and $0.7 million of share-based compensation and deferred tax benefit. We expect to continue to use cash in our operating activities with the expected growth of our business.
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During the six months ended June 30, 2024, net cash used in operating activities was $17.6 million and primarily reflected our net income of $195.0 million, a $84.5 million deferred tax expense and a $0.6 million equity loss from our investment in AirJoule, LLC offset by net noncash operating activities of $282.0 million related to the contribution to AirJoule, LLC, the settlement of legal fees and other costs in connection with the business combination, $4.9 million of changes in fair value of our Earnout, True Up and Subject Vesting shares liabilities and a $11.0 million decrease in our operating assets and liabilities.
Cash Flows from Investing Activities
During the six months ended June 30, 2025, net cash used in investing activities was $10.0 million primarily as a result of our $10 million contribution made to the AirJoule JV.
During the six months ended June 30, 2024, net cash used in investing activities was $10.0 million primarily as a result of our $10 million contribution made to the AirJoule JV.
Cash Flows from Financing Activities
During the six months ended June 30, 2025, net cash provided by financing activities was $14.7 million primarily as a result of the $14.5 million net proceeds from the April 2025 PIPE Offering and $0.1 million of proceeds from the exercise of options.
During the six months ended June 30, 2024, net cash provided by financing activities was $61.9 million and was primarily related to the $61.8 million net proceeds from the issuance of common stock related to private placements prior to the Merger, and $0.1 million of proceeds from the exercise of stock options and warrants.
Contractual Obligations and Commitments
Royalties
In October 2021, we entered into a patent license agreement with a third party whereby the third party granted us rights to use certain of their patents in exchange for an upfront payment and royalties based on a percentage of net sales until such patents expire. In connection with this, the Company agreed to a minimum royalty amount of which $75,000 and $62,500 was expensed for the three months ended June 30, 2025 and 2024, respectively and $150,000 and $125,000 for the six months ended June 30, 2025 and 2024. At June 30, 2025 and December 31, 2024, $150,000 and $250,000, respectively, was accrued in the accompanying condensed consolidated balance sheets.
Joint Venture Agreements
On October 27, 2021, we entered into a joint venture agreement with CATL, pursuant to which we and CATL formed CAMT. We and CATL both own 50% of CAMT’s issued and outstanding shares. Under the joint venture agreement, as revised, CAMT has the exclusive right to commercialize our AirJoule technology in Europe and Asia.
Pursuant to the Amended and Restated Joint Venture Agreement for CAMT, entered into on September 29, 2023, Legacy Montana and CATL US have each agreed to contribute $6.0 million to CAMT. Contributions will be requested by CAMT once a business plan and operating budget is set by CAMT’s board of directors. No action to establish a business plan or operating budget has occurred to date. Any additional financing beyond the initial $12.0 million (i.e., $6.0 million from each of Legacy Montana and CATL US) will be subject to the prior mutual agreement of Legacy Montana and CATL US. CAMT is managed by a four-member board of directors, with two directors (including the chairman) designated by CATL US and two directors (including the vice chairman) designated by Legacy Montana. In the event of an equal vote, the chairman may cast the deciding vote. Certain reserved matters, including debt issuances exceeding $5.0 million in a single transaction or in aggregate within a fiscal year, amendments to CAMT’s constitutional documents the annual financial budget of CAMT, and any transaction between CAMT and CATL US or Legacy Montana in an amount exceeding $10.0 million in a single transaction or in aggregate within a fiscal year, require the unanimous vote of both CATL US and Legacy Montana or all directors. As of June 30, 2025, we have not funded this joint venture or contributed any assets to the joint venture.
The purpose of Legacy Montana’s joint venture with CATL US is to commercialize our AirJoule technology in Asia and Europe and, pursuant to the Amended and Restated Joint Venture Agreement for CAMT, CAMT has the exclusive right to commercialize AirJoule technology in those territories. Subject to the oversight of CAMT’s board, CATL US is responsible for managing the day-to-day operations of CAMT (including the nomination and replacement of the Chief Executive Officer of CAMT), and is responsible for providing CAMT and any subsidiaries formed by CAMT with, among other things, administrative services, supply chain support, assistance in obtaining required permits and approvals and assistance in purchasing or leasing land and equipment.
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Critical Accounting Estimates
There have been no material changes to the critical accounting policies as disclosed in “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” in our Quarterly Report on Form 10-Q for the three months ended March 31, 2025.
Recent Accounting Pronouncements
A discussion of recently issued accounting standards applicable to the Company is described in Note 3 - Summary of Significant Accounting Policies, in the Notes to Financial Statements contained elsewhere in this Current Report on Form 10-Q.
Off Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2025.
Emerging Growth Company Status
We are an emerging growth company as defined in the JOBS Act. The JOBS Act permits companies with emerging growth company status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use this extended transition period to enable it to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.
In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.
We will remain an emerging growth company under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the closing of XPDB’s initial public offering, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on this evaluation of our disclosure controls and procedures as of June 30, 2025, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control Over Financial Reporting
There were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are and, from time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any other legal proceedings that, in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, which could adversely affect our business, financial conditions and future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On April 23, 2025, we entered into the April 2025 PIPE Subscription Agreements with the April 2025 PIPE Investors, pursuant to which, among other things, the April 2025 PIPE Investors agreed to subscribe for and purchase from the Company, and the Company agreed to issue and sell to the April 2025 PIPE Investors, an aggregate of 3,775,126 newly issued shares of Class A common stock at a purchase price of $3.98 per share on the terms and subject to the conditions set forth therein. The April 2025 PIPE Subscription Agreements entitled the April 2025 PIPE Investors to shelf registration rights with respect to the shares of Class A common stock they purchased. The transaction closed on April 25, 2025, and the shares of Class A common stock were issued and sold to the April 2025 PIPE Investors in reliance on Section 4(a)(2) of the Securities Act. We expect to use the proceeds for the funding of future capital expenditures.
On March 25, 2025, we entered into the Equity Line Purchase Agreement with the Equity Line Investor, pursuant to which, among other things, we may, in our sole discretion, elect sell to the Equity Line Investor up to 4,250,000 shares of our Class A common stock, from time to time after the date of this prospectus and during the term of the Purchase Agreement. These securities will be issued and sold in reliance on Section 4(a)(2) of the Securities Act. As of June 30, 2025, sales under the Equity Line Purchase Agreement had not yet commenced.
Item 3. Defaults Upon Senior Securities
None.
Item4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the quarter ended June 30, 2025,
Amended and Restated Executive Severance Plan
On August 12, 2025, the Compensation Committee of the Board of Directors of the Company adopted the AirJoule Technologies Corporation Amended and Restated Executive Severance Plan (the “Amended Plan”). The Amended Plan amends and restates the Montana Technologies Corporation Executive Severance Plan (the “Original Plan”) in its entirety.
Under the Amended Plan, as it relates to Matthew B. Jore (Chief Executive Officer of the Company), Stephen S. Pang (Chief Financial Officer of the Company) or Patrick C. Eilers (Executive Chairman of the Company), each of whom is a named executive officer (each, an “Executive”), if the applicable Executive experiences a termination of employment (i) by the Company without “cause” or by the Executive for “good reason” (each as defined in the Amended Plan) during the 12-month period following the consummation of a “change in control” of the Company (as defined in the Amended Plan), or (ii) by the Company without “cause”
39
during the three-month period prior to the consummation of the change in control (each, a “CIC Qualifying Termination”), the applicable Executive will be eligible to receive the following payments and benefits:
The Amended Plan makes no changes to the other terms and conditions (including the severance payments and benefits that are available to the Executives upon other types of qualifying terminations) of the Original Plan, which are described in the Company’s 2025 Proxy Statement filed with the SEC on April 16, 2025.
The foregoing description of the Amended Plan is not complete and is qualified in its entirety by reference to the full text of the Amended Plan, which is attached as Exhibit 10.6 to this Quarterly Report on Form 10-Q and incorporated into this Item 5 by reference.
40
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Report.
Exhibit No. |
|
Description |
2.1 |
|
|
2.2 |
|
|
2.3 |
|
|
3.1 |
|
|
4.1 |
|
|
4.2 |
|
|
10.1 |
|
|
10.2 |
|
|
10.3 |
|
|
10.4 |
|
|
10.5+ |
|
Amended and Restated Non-Employee Director Compensation Program. |
10.6+* |
|
|
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
101.INS* |
|
Inline XBRL Instance Document. |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104* |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document |
* |
Filed or furnished herewith. |
+ |
Indicates management contract or compensatory plan. |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
AIRJOULE TECHNOLOGIES CORPORATION |
|
|
|
|
August 14, 2025 |
By: |
/s/ Stephen S. Pang |
|
Name: |
Stephen S. Pang |
|
Title: |
Chief Financial Officer |
42