AIRJ 10-K & 10-Q changes, risk factors and insider trading

We are an early-stage water harvesting technology company with a history of losses. We have incurred a net income (loss) of $215.7$(9.0) million and $(11.4)$215.7 million for the years ended December 31, 20242025 and 2023, 2024, respectively. Although our predecessor entity was established in 2018, we did not develop our first prototype of the AirJoule unitsystem until June 2021, and we have not yet begun commercializing our AirJoule units.systems. We expect that we will continue to incur losses in future periods as we:

Our ability to become profitable in the future will require us to complete the design and development of our AirJoule unitssystems and to begin commercializing the product and related services to customers at prices needed to achieve positive gross margins. We may need to sell our products at a loss or discounted prices in the short term to win initial customer orders and gain the confidence of potential customers. We anticipate also deploying the AirJoule systems through Water Purchase Agreements, where customers purchase water on a volumetric basis rather than purchasing AirJoule systems outright, and our losses related to WPA deployments may be significant as we are responsible for the capital requirements for the deployments. If we are unable to efficiently design, produce, market, sell, distribute and service our products, our margins, profitability,profitability and long-term prospects will be materially and adversely affected.

We have not yet commenced commercialcommercializing activitiesour AirJoule systems and have a limited operating history, which may make it difficult to evaluate the prospects for our future viability. There is no assurance that we will successfully execute our proposed strategy.

We are a pre-revenue and early-stage company. Our operations to date have been limited to developing our technology and products.products and deploying our AirJoule systems to select locations for field testing. Our limited operating history may make it difficult to evaluate our current business and future prospects as we continue to grow our business. Our ability to forecast future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, and we will continue to encounter such risks and uncertainties as we grow our business. If our assumptions regarding these uncertainties are incorrect, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer. Consequently, any predictions we make about our future success and our viability may not be as accurate as they could be if we had an operating history.

To date, we have not had anylimited commercial sales of our products. Operating results are difficult to forecast as they generally depend on our assessment of the demand for our products. Our business may be affected by reductions in demand for our products and the price of competitors’ products as a result of a number of factors which may be difficult to predict. Similarly, our assumptions and expectations with respect to margins and the pricing of our AirJoule unitssystems may not prove to be accurate. We may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in demand, which could ultimately cause our operating results to differ from expectations. If actual results differ from our estimates, analysts or investors may negatively react and our share price could be materially adversely affected.

After we have successfully developed and commercialized our AirJoule technology, we will initially depend on revenue generated from our AirJoule unitssystems and revenue from ancillary services for the foreseeable future and will be significantly dependent on a single or limited number of products. Given that, for the foreseeable future, our business will depend on a single or limited number of products, to the extent that a particular product is not well-received by the market, our sales volume, prospects, business, results of operations and financial condition could be materially and adversely affected.

Commercialization of our AirJoule unitstechnology is subject to a number of significant risks, including project delays, cost overruns, changes in scope, unanticipated site conditions, design and engineering issues, incorrect cost assumptions, increases in the cost of materials and labor, health and safety hazards, third-party performance issues and changes in laws or permitting requirements. If a third party or other subcontractor that we have contracted fails to fulfill its contractual obligations to us, we could face significant delays, cost overruns and liabilities. Our continued growth will depend in part on executing a greater volume of large projects, which will require us to expand and retain our project management and execution personnel and resources. If we are unable to manage these risks, we may incur higher costs, liquidated damages and other liabilities, which may decrease our profitability and harm our reputation.

The technology behind our AirJoule unitsystem is very complex. While we have successfully produced prototypeAirJoule unitssystems within our testfacilities facilities,and deployed systems to select locations for field testing, we are still in the process of optimizing the technology to deliver water and dehumidified and cooled air at the productivity and energy efficiency levels that we are anticipating we can achieve. If we are unable to successfully develop our technology, our operating and financial results could materially differ from our expectations and our business could suffer.

The industries in which we operate are subject to rapid technological change, evolving industry standards and practices and changing customer needs and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. We may introduce significant changes to our AirJoule unitssystems or develop and introduce new and unproven products, including using technologies with which we have little or no prior development or operating experience. If we are unable to develop and sell new technology, features and functionality for our AirJoule units systems that satisfy our customers and that keep pace with rapid technological and industry change, our revenue and operating results could be adversely affected. If new technologies emerge that deliver competitive solutions at lower prices, more efficiently, more conveniently or more securely, it could adversely impact our ability to compete and place us at a competitive disadvantage.

We will require significant capital to develop and grow our business and we expect to incur significant expenses, including those relating to developing and commercializing our AirJoule units,systems, research and development, production, sales, maintenance and service and building the AirJoule brand. Our current estimates of the costs associated with development and commercialization could prove inaccurate, and that could impact the cost of our technology and of our business overall. If we are unable to efficiently design, develop, commercialize, license, market and deploy our technology in a cost-effective manner, our margins, profitability and prospects would be materially and adversely affected.

The actual operating costs of manufacturing, commercializing and distributing AirJoule unitssystems on a commercial scale will depend upon a variety of factors, such as changes in the availability of and price of materials and changes in governmental regulation, including taxation, environmental, permitting and other regulations and other factors, many of which are beyond our control. Due to any of these or other factors, our capital and operating costs may be significantly higher than those initially estimated by management. As a result of higher capital and operating costs, our financing ability may be impacted, and this may be further affected by lower commodity prices in the international markets that could impact production or economic returns, which may differ significantly from management’s expectations and there can be no assurance that any of our development activities will result in profitable operations.

The markets for generationwater ofgeneration, potableindustrial waterdehumidification and energy-efficient air conditioning are evolving and highly competitive. We expect competition to increase in the future from established competitors and new market entrants. This could negatively impact our ability to compete in these markets. We will face competition from other water generation generation, dehumidification and comfort cooling companies that offer standalone water production and air conditioning solutions and services. In addition, we may face competition from niche companies and new market entrants that offer point products that attempt to address the specific problems that our AirJoule unitssystems attempt to solve.

Some of our larger competitors also have substantially broader product lines and market focus and will therefore not be as susceptible to downturns in a particular market. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering by our competitors, or continuing market consolidation. New start-up companies that innovate and/or large companies that are making significant investments in research and development may invent similar or superior products and technologies that compete with our AirJoule units.systems. In addition, some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with agency partners, technology and application providers in complementary categories or other parties. Any such consolidation, acquisition, alliance or cooperative relationship could lead to pricing pressure, a loss of market share or a smaller addressable share of the market, all of which could harm our ability to compete and may materially affect our results of operations and financial condition.

We are currently conducting the majority of our development, operations and commercialization activities through our joint venture with GE Vernova, of which we and GE Vernova each own a 50% interest. This AirJoule JV was formed in March 2024 to incorporate GE Vernova’s proprietary sorbent materials into systems that utilize our water capture technology and to manufacture and bring products incorporating the combined technologies to market in the Americas, Africa and Australia. Additionally, we have entered into a joint venture agreement with an affiliate of CATL to manufacture and commercialize our AirJoule technology in Asia and Europe, but this joint venture has not yet been funded by either party and has not yet commenced any operation’s.operations. Our heavy reliance on joint ventures could adversely affect our business and financial condition if any of our joint venture partners chooses to terminate their relationship with us or make material changes to their businesses, products or services in a manner that is adverse to us.

We may incur impairment charges related to the carrying value of our equity method investment in the AirJoule JV, which could have a significant negative effect on our financial condition, results of operations and the price of our securities.

We regularly evaluate the carrying value of our equity method investment in the AirJoule JV, and we may incur an impairment charge if we determine that the carrying value of such investment exceeds the fair value. For example, if the AirJoule JV recognizes a goodwill impairment charge in its separate financial statements, we would be required to impair the value of our investment in the AirJoule JV.

The AirJoule JV tests its goodwill for impairment annually on October 1 and more frequently if events or changes in circumstances indicate that a potential goodwill impairment exists. Asset impairment evaluations with respect to goodwill are, by nature, highly subjective. The use of different estimates and assumptions could result in materially different carrying values of the AirJoule JV’s assets, which could impact the need to record an impairment charge and the amount of any charge taken. If AirJoule JV’s assumptions, including timing of revenue generation and forecasted EBITDA, are not achieved, or a sustained reduction in market capitalization occurs, then the AirJoule JV may be required to record goodwill impairment charges in future periods.

Though any impairment wecharges maywould be required to incur in the future would be a non-cash charge and therefore not have an immediate impact on our liquidity, the fact that we report a charge of this nature could contribute to negative market perceptions about our business or our securities. In addition, charges of this nature may hinder our ability to obtain future financing on favorable terms or at all.

Our manufacturing processes rely on many materials. We purchase, and will continue to purchase, a significant portion of our materials, components and finished goods used in our production facilities from a few suppliers, some of which are single-source suppliers. For example, our proprietary MTMOF1, which is highly engineered to adsorb water vapor molecules and is utilized in our AirJoule units,systems, is currently being manufactured solely by BASF (an international chemical company). As certainwe scale up our operations ahead of full-scale commercialization, we are evaluating additional and alternate suppliers of our proprietary MTMOF1, but these materials are highly specialized, and the lead time needed to identify and qualify a new supplier is typically lengthy and there is often no readily available alternative source.lengthy. We do not generally have long-term contracts with our supplierssuppliers, and substantially all of our purchases are on a purchase order basis. Suppliers may extend lead times, limit supplies, place products on allocation or increase prices due to commodity price increases, capacity constraints or other factors and could lead to interruption of supply or increased demand in the industry.

Additionally, the supply of these materials may be negatively impacted by increased trade tensions or additional or increased tariffs between the U.S.United States and its trading partners. In the event that a single-source supplier is unable or unwilling to provide sufficient materials to us in a timely manner and we cannot have not identified and qualified additional or alternate providers for those materials, our business, financial condition and results of operations could be adversely impacted. Similarly, if we are unable to obtain sufficient quantities of materials in a timely manner, at reasonable prices or of sufficient quality, or if we are not able to pass on higher materials costs to our customers, our business, financial condition and results of operations could be adversely impacted.

It is possible that in the future we may experience delays and other complications from our partners and third-party suppliers in the development and manufacturing of the components and other implementing technology required for deploying our AirJoule units.systems. Any disruption or delay in the development or supply of such components and technology could result in the delay or other complication in the design, manufacture, production and delivery of our technology that could prevent us from commercializing our AirJoule unitssystems according to our planned timeline and scale. If delays like this recur or if we experience issues with planned manufacturing activities, supply of components from third parties or design and safety, we could experience issues or delays in commencing or sustaining our commercial operations.

On January 7, 2024, concurrently with the execution of the Common Unit Subscription Agreement, we and CAMT entered into the Binding Term Sheets with Carrier, pursuant to which, among other things, the parties agreed to negotiate in good faith to finalize and enter into, as promptly as reasonably practicable, definitive agreements relating to the development of the Applicable Products and the viability of the commercialization of the Applicable Products. Despite entry into the Binding Term Sheets, we and CAMT ultimately may not enter into definitive agreements with Carrier on terms consistent with the Binding Term Sheets or at all.

We are in the process of developingcommercializing our technology and do not yet have any long-term commercial customers. We expect to initially depend upon a small number of customers for a substantial portion of our future revenue. Accordingly, a decline in revenue from, or the loss of, any significant customer could have a material adverse effect on our financial condition and operating results. We cannot assure you that prospective customers will ultimately utilize our products and services or enter into contracts with us for such products and services on acceptable terms or at all.

Our success depends, in part, on our ability to acquire and retain new customers and to do so in a cost-effective manner. In order to obtain and expand our customer base, we must appeal to, acquire and enter into sales agreements, lease agreements or Water Purchase Agreements with third-party customers on commercially viable terms, either directly or through third-party distributors. We expect to make significant investments related to customer acquisition in the future. If we fail to deliver and market a robust product that appeals to customers, or if customers do not perceive AirJoule unitssystems to be of high value and quality, we may be unable to acquire or retain customers. If we are unable to acquire or retain customers sufficient to grow our business, we may be unable to generate the scale necessary to achieve operational efficiency. Consequently, our prices may increase or may not decrease to levels sufficient to generate customer interest, and total revenue may decrease and margins and profitability may decline. As a result, our business, financial condition and results of operations may be materially and adversely affected.

We are currently party to a joint venture with an affiliate of CATL, a Chinese battery manufacturer and technology company, and apurchase developmentour agreementMOF withfrom BASF, an international chemical producer headquartered in Germany. We have also entered into agreements with TenX Investment in Energy Enterprises & Management Co., an UAE-based technology and infrastructure investment firm, and we expect to coordinate with this entity on our deployment of AirJoule systems to the Middle East. We may continue to pursue partnerships and operations outside of the United States, including with suppliers and partners that are located or operate in other countries. Accordingly, we are subject to risks associated with operating in foreign countries, including:

Our business and current and future production facilities are subject to liabilities and operating restrictions arising from environmental, health and safety laws, regulations,regulations and permits. We are and will be subject to environmental, health and safety laws and regulations in multiple jurisdictions, which impose substantial compliance requirements on our operations. Our operating costs could be significantly increased in order to comply with new or more stringent regulatory standards in the jurisdictions in which we operate.

Our business and our and our joint venture’s and partners’ current and future production facilities are and will be subject to various foreign, federal, state and local environmental, health and safety (“EHS”) laws, regulations, guidelines, policies, directives, permits and other requirements. Pursuant to these requirements, we may be required to obtain various permits from certain regulatory agencies for our operations. If our facilitiesfacilities, operations, systems and operations resulting water do not comply with such laws, regulations, requirements or permits, each of which may vary across the jurisdictions in which we operate, we may be required to pay significant administrative or civil penalties or fines, curtail or cease operation of the affected facilities, make costly modifications to such facilities, be subject to civil litigation or seek new or amended permits for our operations. Violations of environmental and other laws, regulations,regulations and permit requirements, including certain violations of laws protecting wetlands, migratory birds,birds and threatened or endangered species, may also result in criminal sanctions or injunctions. The global EHS regulatory environment continuesFailure to change,comply andwith these laws and regulations,regulations may also result in the imposition of investigatory, remedial and corrective action obligations, the incurrence of capital expenditures, the occurrence of delays in the permitting, development or expansion of projects and the enforcementissuance thereof,of haveorders tendedenjoining to become more stringent over time. It is possible that new standards could be imposed,some or interpretation or enforcementall of existingour future operations in a particular area. Certain environmental laws and analogous state laws and regulations couldimpose change, makingstrict thejoint regulatoryand environmentseveral moreliability, stringent.without Suchregard changesto couldfault resultor in higher operating expenses, the obsolescencelegality of ourconduct, products orfor ancosts interruptionrequired to clean up and restore sites where hazardous substances or suspensionother wastes have been disposed of our operations and have an adverse effect on our business, financial condition and results of operations. If it is not economical to make those expenditures, or ifotherwise we violate any applicable EHS laws and regulation, it may be necessary to retire or suspend operations of our facilities or restrict or modify our operations to obtain or maintain compliance, either of which could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.released.

Furthermore, foreign, federal, state,state and local governments are increasingly regulating and restricting the use of certain chemicals, substances,substances and materials. Some of these policy initiatives could impact our business. For example, laws, regulations, or other policy initiatives might restrict substances found within component parts to our products, in which event we would be required to comply with such requirements, which could in turn require changes to our products and increase our production and operating costs.

Our business could be adversely affected by trade wars, trade tariffs or other trade barriers.barriers and related government actions.

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with Part I of this Annual Report on Form 10-K, the consolidated financial statements and related notes included in Part II Item 8 in this Annual Report on Form 10-K and the section titled “Cautionary Note Regarding Forward-Looking Statements” included in the forepart in this Annual Report on Form 10-K.

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,will,” “expect,” “might,” “plan,” “anticipate,” “could,” “intend,” “target,” “goal,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” “would,” “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 Predecessor,Legacy (the predecessor entity in existence prior to the consummation of the Business Combination)Montana, and its consolidated subsidiaries.

We are aan water harvestingadvanced technology company thatwhose aimspurpose is to providefree energy andthe cost-efficientworld from its water harvestedand fromenergy air.constraints by delivering groundbreaking sorption technologies. Our product,platform technology, AirJoule, is a climate solution technology that harvests the water vapor in the atmosphere and produces pure distilled water tofrom improveair and, at commercial scale, will mitigate water securityscarcity andthrough sustainabilitydistributed water generation for businesses and consumers around the world. AirJouleOur isproducts are especially valuable for industrial users, which generate significant amounts of waste heat that can be utilizedused 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, our AirJoule technology is designed to reduce energy consumption, minimize or even eliminate the use of environmentally-harmful refrigerants,refrigerants and generate material cost efficiencies for air conditioning systems. We are focused on commercializationcommercializing and scaling manufacturing of our AirJoule systems through our global partnershipscollaborations, including our 50/50 joint venture with GE Vernova Inc. (NYSE: GEV) and our commercial partnerships with Carrier ,Global Corporation (NYSE: CARR) and we TenX Investment in Energy Enterprises & Management Co. We believe that deploying AirJoule unitssystems worldwide canwill unleash the power of water from air and help to improve global water securitysecurity. During 2025, we manufactured and reducedeployed globalAirJoule emissions.Core Wesystems plan(previously referred to manufacture AirJouleas unitsour capableA250 ofsystems) producingfor 1,000field literstesting perand daycustomer demonstrations in 2025,Texas, whichArizona weand intend to use for customer demonstrations,Dubai, and we expectadvanced the productization and manufacturing scale-up of our Core and larger Prime (previously referred to scale capacitiesas our A1000 system) system in preparation for commercial sales beginning in late 2026.

We anticipate significant growth opportunities by offering the AirJoule technology in global markets where demand for water, dehumidified air and cooling are highest. With our proprietarytechnology 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 hingedepend on consistent humidity and ultra-pure water, AirJouleour technology 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 willcan reduce power consumption and the use of refrigerants in air conditioning systems.

To accelerate market penetration and scale our manufacturing capabilities, we plan to leverage our strategic partnerships, which are discussed below.partnerships. These partnerships offer access to industry-specific R&D expertise, mature supply chains, established sales channels,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 willexpect to unlock value across multiple industries, establish our position as a leader in water-focused solutions, solutions and deliver long-term growth and value to our shareholders.

General and administrative expenses for the year ended December 31, 2024 was2025 $9.0were $12.5 million as compared to $7.5$9.0 million for the year ended December 31, 2023.2024. The $1.5$3.4 million increase was primarily related to increasesa $3.8 million increase in professionalstock-based servicescompensation suchexpense and a $1.6 million increase in salaries and benefits as legala andresult auditof andan accountingincreased headcount offset by an increase in the reimbursement of costs incurred per the statement of work with AirJoule, LLC.LLC of $0.8 million, a $0.7 million decrease in accounting, audit and legal fees, a $0.4 million decrease in professional services and a $0.1 million decrease in insurance expense. 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.business.

Research and development expenses for the year ended December 31, 2024 was2025 $2.0were $1.0 million as compared to $3.3$2.0 million for the year ended December 31, 2023.2024. The $1.3$1.0 million decrease was primarily related to a decrease in the purchase of materials and services of $2.0 million and the decrease in patent and royalty fees of $0.7 million offset by the decrease in reimbursement of costs incurred per the statement of work with AirJoule, LLC,LLC partiallyof offset$1.3 bymillion anand the increase in personnelstock-based and prototype relatedemployee costscompensation as the Company continues to develop its products and technology. We expect that our research and development expenses will increase in future periods commensurate with the expected growthexpense of our$0.4 business.million.

Sales and marketing expenses for the year ended December 31, 20242025 waswere $0.2$79,326 million as compared to $0.5 million$150,927 for the year ended December 31, 2023. In 2023, we incurred non-recurring expenses related to business development that ended in July 2023.2024. We expect that our sales and marketing expenses will increase in future periods commensurate with the expected growth of our business.

Depreciation and amortization expenseexpenses for the year ended December 31, 2024 2025 and 20232024 waswere $6,517$9,837 and $4,341,$6,517, respectively.

Interest income was $0.9$1.0 million and $11,541$0.9 million for the year ended December 31, 20242025 and 2023,2024, respectively. This is a result of the increase in our cash balance.

An equity method investment received in exchange for noncashnon-cash consideration is measured at fair value. As a result, for the year ended December 31, 2024, we recognized a gain of $333.5 million on the contribution to AirJoule, LLC forwhich represents the difference between our zero carrying value and the fair value of the perpetual license to intellectual property that we transferred to AirJoule, LLC.

As previously noted, on January 25, 2024, AirJoule Technologies, LLC entered into a joint venture with GE Ventures LLC, the AirJoule JV which closed on March 4, 2024. For the year ended December 31, 2025 and 2024, we recognized a loss of $39.3 million and $5.3 million from our 50% equity investment in the AirJoule JV.JV, respectively.

Upon consummation of the Business Combination, we expensed $53.7 million in Earnout Shares (as described in “-Earnout- Earnout Shares Liability”) liability. The change in fair value of $18.3 million and $29.2 million for the yearyears ended December 31, 20242025 isand December 31, 2024, respectively, was primarily due to a decrease in the estimated fair value of the liability and is recognized as a gaingains in the consolidated statements of operations. The fair value of the liability decreased primarily due to changes in the valuation inputs, mainly a decrease in the stock price,price aand changechanges in the timing of future cash flows and an increase in the volatility.flows.

Upon consummation of the Business Combination, we assumed $0.6 million in earnoutTrue trueUp up sharesShares liability. The change in fair value of $1.6the millionliability forduring the year ended December 31, 20242025 iswas primarily due to a decrease in our stock price. The increase in the estimatedtriggering fairevent valueand issuance of theClass liabilityA wascommon recognized as a loss in the consolidated statements of operations.stock.

Upon consummation of the Business Combination, we assumed an $11.8 million for theSubject subjectVesting vesting sharesShares liability. The change in fair value of income of $6.6 million and $4.0 million during the year ended December 31, 20242025 is and December 31, 2024, respectively, was primarily due to a decrease in the estimated fair value of the liability and recognized as a gaingains in the consolidated statements of operations. The fair value of the liability decreased primarily due to changes in the valuation inputs, mainly a decrease in the stock price,price aand change changes in the timing of future cash flows and an increase in the volatility.flows.

Income tax benefit (expense) was $81.3$18.3 million and $0$(81.3) million for the year ended December 31, 20242025 and 2023,2024, respectively. For the year ended December 31, 2025, the income tax benefit and the resulting effective tax rate differed from the U.S. federal statutory rate primarily due to the impact of state income taxes, including state jurisdictions in which the Company became subject to tax following the Business Combination, as well as changes in deferred tax liabilities associated with temporary differences. Our state effective tax rate of 19.5% for the year ended December 31, 2025 was primarily driven by the remeasurement of deferred tax balances resulting from a decrease in applicable state tax rates from 2024 to 2025. Due to the Company’s significant beginning deferred tax liabilities, this rate change had a disproportionate impact on the current year tax provision; the impact of such remeasurements may vary in future periods. The 2025 effective tax rate was also affected by other permanent items, including the changes in fair value of our liabilities and stock-based compensation expense. During the year ended December 31, 2024, our contribution of a perpetual license to AirJoule, LLC’s intellectual property was measured at fair value and 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. The deferred tax expense was partially offset by the recognition of deferred tax assets in connection with the Company now being a corporation through theCompany’s Business Combination.

Our primary sources of liquidity have been cash from contributions from founders or equity capital raised from other investors. We had retained earnings of $198.5 million asAs of December 31, 2024. As of December 31, 2024,2025, we had $27.4$21.5 million of working capital including $28.0$21.8 million in cash, cash equivalents and restricted cash.

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,initiatives and the growth of our business generally. Pursuant to the A&R Joint Venture Agreement, we contributed $10.0 million in cash to the AirJoule JV at the JV closing and in June 2024, GE Vernova contributed $100 to the AirJoule JV. We have also agreed to contribute up to an additional $90.0 million in capital contributions to the AirJoule JV based on a business plan and annual operating budgets to be agreed between the Company and GE Vernova. 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.needs, including the remaining commitment for capital contributions to the AirJoule JV. While we believe that the proceeds realized to date will be sufficient to meet our currently contemplated business needs,sufficient, 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.

During the year ended December 31, 2024,2025, net cash used in investing activities was $10.0$17.8 millionmillion, primarily as a result of theour Company’s contributioncontributions made to AirJoule,the LLC.AirJoule JV during the period.

During the year ended December 31, 2024,2025, net cash provided by financing activities was $61.9$17.2 million, primarily as a result of the $14.2 million andof primarily related tonet proceeds from the issuanceApril 2025 PIPE Offering, approximately $3.0 million, from the Equity Line Purchase Agreement and $0.1 million of theproceeds Predecessor common stock related to private placements prior to the Merger,from the exercise of stock options and warrantspurchases andpursuant theto issuanceour of commonemployee stock topurchase PIPE investors.plan.

Maintaining effective internal control over financial reporting is complex, time-consuming and costly. Our internal controls may become inadequate because of changes in conditions, the growth of our business, the expansion of our operations or for other reasons. As described in Item 4 - Controls and Procedures duringin theour quarterpreviously endedfiled MarchQuarterly 31,Report on Form 10-Q filed on May 15, 2026, we identified a material weakness in our internal control over financial reporting. In addition, management’s assessment of our internal control over financial reporting may identify additional material weaknesses or significant deficiencies that could require remediation. We may not be able to remediate any identified material weaknesses or significant deficiencies in a timely manner, or at all.

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 platform technology, AirJoule, produces pure distilled water from air and, 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, our technology 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 commercializing and scaling manufacturing of our AirJoule systems through our global collaborations, including our 50/50 joint venture with GE Vernova Inc. (NYSE: GEV) and our commercial partnerships with Carrier Global Corporation (NYSE: CARR) and TenX Investment in Energy Enterprises & Management Co (“TenX”). We believe that deploying AirJoule systems worldwide will unleash the power of water from air and help to improve global water security. During 2025, we manufactured and deployed AirJoule Core systems (previously referred to as our A250 systems) for field testing and customer demonstrations in Texas, Arizona and Dubai, and we advanced the productization and manufacturing scale-up of our Core and larger Prime (previously referred to as our A1000 system) system in preparation for commercial sales beginning in late 2026.

We anticipate significant growth opportunities by offering the AirJoule technology 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 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 militarymilitary, residential development, 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 depend on consistent humidity and ultra-pure water, our technology 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. For residential applications, we have partnered with Kubota to deploy AirJoule systems for off-grid water generation to support multi-unit residential developments in water-scarce regions. 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 can reduce power consumption and the use of refrigerants in air conditioning systems.

Revenue will be earned primarily from the assembly and sale of AirJoule systems. During the year ended December 31, 2025, the AirJoule JV recognized $0.1 million of revenue through the sale of a pre-production unit to an academy partner for research and validation purposes. No revenue was earned in the threesix months ended MarchJune 31,30, 2026.

The three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025

The following table sets forth the Company’s condensed consolidated statements of operations data for the three and six months ended MarchJune 31,30, 2026 and 2025:

General and administrative expenses for the threesix months ended MarchJune 31,30, 2026 were $3.3$7.2 million as compared to $2.8$6.5 million for the threesix months ended MarchJune 31,30, 2025. The $0.6 million increase was primarily related to a $0.4 million increase inhigher stock-based compensation expense,expense a $0.2 million increase inand audit andfees, legal fees and a $0.1 million increase in salaries and benefits as a result of an increased headcountpartially offset by anlower increaseother inprofessional theservices reimbursement of costs incurred per the statement of work with AirJoule, LLC of $0.1 million and a $0.1 million decrease in insurance expense. We expect that our general and administrative expenses will increase in future periods commensurate with the expected growth of our business.costs.

Research and development expenses for the three months ended MarchJune 31,30, 2026 were $215,471$0.2 million as compared to $387,919$0.4 million for the three months ended MarchJune 31,30, 2025.2025, Thereflecting $0.2minor million decrease was primarily related to a decreasechanges in royalty fees of $0.1 million, a decrease in salaries and benefits, materials and professional services of $0.1 million and an increase in the reimbursement of costs incurred per the statement of work with AirJoule, LLC of $0.1 million offset by the increase in stock-based compensation and engineering services of $0.1 million.LLC.

Sales and marketing expenses for the three months ended MarchJune 31,30, 2026 were $45,903$118,047 as compared to $14,209$7,794 for the three months ended MarchJune 31,30, 2025. We expect that our sales and marketing expenses will increase in future periods commensurate with the expected growth of our business.

Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 and 2025 was $3,902$4,405 and $1,588,$2,289, respectively.

Interest income was $284,665$292,929 and $243,024$283,733 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. This was primarily a result of the increase in our cash balance.

As previously noted, on January 25, 2024, AirJoule Technologies,Technologies LLC entered into a joint venture with GE Ventures LLC, the AirJoule JV which closed on March 4, 2024. For the three months ended MarchJune 31,30, 2026 and 2025, we recognized a loss of $63.1$2.5 million and $2.2$2.1 million, respectively. The equity loss from investment in AirJoule, LLC for the three months ended MarchJune 31,30, 2026 was primarily as a result of the impairment to AirJoule, LLC’s in-process R&D.

The change in fair value of the liability during threethe six months ended MarchJune 31,30, 2025 was primarily due to the triggering event and issuance of Class A common stock.

On March 25, 2025, we entered into aan Equity Line Purchase Agreement with B. Riley Principal Capital II, LLC. See Note 2 - Liquidity and Capital Resources. During the threesix months ended MarchJune 31,30, 2026, we recognized a $35,598 change in the fair value of the related liability.

For the three months ended MarchJune 31,30, 2026 and 2025, income tax benefit was $14.7$2.9 million and $1.6 million, respectively. The effective tax rate during this period was primarily driven by non-deductible mark to market adjustments, state taxes and stock compensation. For the threesix months ended MarchJune 31,30, 2026 and 2025, income tax benefit was $17.7 million and $3.2 million, respectively. For the six months ended June 30, 2026, the effective tax rate was primarily driven by our share of the impairment to AirJoule, LLC’s in-process R&D and non-deductible mark to market adjustments, state taxes and stock compensation. For the threesix months ended MarchJune 31,30, 2025, the effective tax rate was driven by non-deductible mark to market adjustments, state taxes and stock compensation.

The June Public Offering of Class A Common Stock

On JanuaryJune 15,1, 2026, we completedentered into a publicsecurities offeringpurchase agreement with certain institutional investors pursuant to which we agreed to issue and sell to the investors an aggregate of its3,658,536 shares of Class A common stock,stock parat valuea $0.0001purchase price of $4.10 per share,share in a registered direct offering, or the June 2026 Offering, pursuant to a prospectus supplement filed under Rule 424(b)(5) under the Securities Act of 1933, as amended.

In the January Offering, we issued an aggregate of 7.1 million shares of Class A common stock, consisting of 6.2 million shares sold in the initial offering and 0.9 million additional shares issued upon the underwriter’s full exercise of its 45-day overallotment option, at a public offering price of $3.25 per share. TotalAfter proceedsgiving fromeffect theto Offeringthese wereamounts $22.1and million net of certainother legal and otheroffering out-of-pocketexpenses expenses.paid by the Company, net proceeds to the Company were $21.6 million

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. There were no sales under the Equity Line Purchase Agreement during the threesix months ended MarchJune 31,30, 2026.

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 threesix months ended MarchJune 31,30, 2026, we contributed an additional $10.0$12.5 million in capital contributions to the AirJoule JV.

Our primary sources of liquidity have been cash from contributions from founders or equity capital raised from other investors. As of MarchJune 31,30, 2026, we had $31.4$41.0 million of working capital including $31.1$41.4 million in cash, cash equivalents and restricted cash.

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, including the remaining commitment for capital contributions to the AirJoule JV. While we believe that the proceeds realized to date will be sufficient,sufficient to meet our anticipated cash requirements, including funding our operations and capital contributions to the AirJoule JV, for at least the next twelve months from the date of this filing, 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 threesix months ended MarchJune 31,30, 2026 and 2025

The following table summarizes our cash flows from operating, investing and financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025:

During the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $2.3$3.8 million, primarily relatedreflecting cash used to fund our general and administrative and otherresearch operatingand expensesdevelopment incurred to support the growth of our business.expenses. We expect to continue to use cash in operating activities as we continue to expand our operations.

During the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities was $72,246$2.2 million and primarily reflected our net income from operations andoffset by changes in operating assets and liabilities including decreases in our due from related party and accrued expenses and other liabilities accounts.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $10.0$12.5 million primarily as a result of our contributions made to the AirJoule JV during the period.

During the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities was $5.1$10.0 million primarily as a result of our contributions made to the AirJoule JV.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $21.6$35.8 millionmillion, primarily as a result of the $22.2$35.9 million in net proceeds from the issuance of our common stock offset by $0.5 million in deferredthe offeringJanuary costs2026 paid.and June 2026 Offerings.

During the threesix months ended MarchJune 31,30, 2025, net cash provided by financing activities was $41,760$14.6 million and was primarily related to net proceeds of $14.6 million from the April 2025 PIPE offering and $0.1 million from the exercise of stock options.

On October 27, 2021, we entered into a joint venture with CATL US Inc., or 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, or CAMT. We and CATL US both own 50% of CAMT’s issued and outstanding shares. While we and CATL both continue to own 50% of CAMT’s issued and outstanding shares, neither we nor CATL funded this joint venture or contributed any assets to the joint venture. Similarly, no business plan or operating budget havehas ever been set by CAMT’s board of directors. As of MarchJune 31,30, 2026, no amount was funded to CAMT and our financial statements do not reflect any accounting for CAMT as no assets (including IP) or cash have been contributed to CAMT.

We did not have any off-balance sheet arrangements as of MarchJune 31,30, 2026.