AirJoule Technologies Corp. (AIRJ)

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, 2025.

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,” “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 the business and operations of AirJoule Technologies Corporation 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. 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). 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 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 system in preparation for commercial sales beginning in late 2026.

Growth Strategy and Outlook

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 military, 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

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indoor air quality, AirJoule’s superior moisture removal capability can 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. 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 expect to 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

Third-Party Recognition

2026 CleanTech Breakthrough Awards

On April 9, 2026, we announced that we had been named the winner of the "Water Tech Innovation of the Year" award in the 2026 CleanTech Breakthrough Awards program. The program is conducted by CleanTech Breakthrough, an independent market intelligence organization that evaluates climate and clean technology companies, products and services globally. Winners are selected from thousands of nominations submitted by companies around the world through a multi-step evaluation conducted by an independent panel of industry experts, with each entry assessed on criteria including innovation, performance, market impact and value.

Strategic Partnerships

Kubota Exclusive Residential Sales Partnership

On July 21, 2026, we announced an exclusive sales agreement with Kubota Corporation, a global provider of water and environmental infrastructure solutions, together with initial deployments of AirJoule systems in Texas and California. Under the agreement, Kubota will market, sell and distribute AirJoule systems for multi-unit residential developments in the initial territories of Texas and California. Kubota also purchased two AirJoule Core systems for initial deployments at sites near Corpus Christi, Texas and Irvine, California, both of which are expected to begin during the third quarter of 2026. The deployments will pair our atmospheric water generation technology with Kubota's wastewater treatment, water reclamation, pipe systems and operation and maintenance capabilities, and are expected to generate operational data across a range of environmental conditions relevant to residential water supply. The parties may consider broader commercial collaboration based on the results of the initial deployments, customer needs, and the feasibility of integrating AirJoule systems with Kubota's wastewater reclamation equipment and digital infrastructure capabilities.

Field Deployments and Demonstrations

GE Vernova Advanced Research Center Frontier Campus

On July 28, 2026, we announced the deployment of an AirJoule Core atmospheric water generation system at GE Vernova's Advanced Research Center Frontier Campus in Niskayuna, New York. The facility, which held its grand opening on July 16, 2026, was advanced with more than $110 million of combined investment from GE Vernova and the State of New York, and GE Vernova featured AirJoule among the technologies on display at the opening. The system operates at the campus as a live showcase for GE Vernova customers and partners visiting the facility, demonstrating the production of pure distilled water directly from air.

Components of Our Results of Operations

Revenue

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 six months ended June 30, 2026.

Operating Expenses

We classify our operating expenses into the following categories:

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•
General and administrative: General and administrative expenses consist primarily of personnel-related expenses for our executives, consultants and advisors. These expenses also include non-personnel costs, such as rent, office supplies, legal, audit and accounting services and other professional fees.

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Research and development: Research and development expenses include internal personnel, parts, prototypes and third-party consulting costs related to preliminary research and development of our products.

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Sales and marketing: Sales and marketing expenses consist primarily of business development, professional fees, advertising and marketing costs.

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Depreciation and amortization: Depreciation and amortization expense consists of depreciation of property and equipment.

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, 2026 compared to the three and six months ended June 30, 2025

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

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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 year ended December 31, 2025 compared to the year ended December 31, 2024

The following table sets forth the Company’s consolidated statements of operations data for the year ended December 31, 2025 and 2024:

General and Administrative

General and administrative expenses for the year ended December 31, 2025 were $12.5 million as compared to $9.0 million for the year ended December 31, 2024. The $3.4 million increase was primarily related to a $3.8 million increase in stock-based compensation expense and a $1.6 million increase in salaries and benefits as a result of an increased headcount offset by an increase in the reimbursement of costs incurred per the statement of work with AirJoule, 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.

Research and Development

Research and development expenses for the year ended December 31, 2025 were $1.0 million as compared to $2.0 million for the year ended December 31, 2024. The $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 of $1.3 million and the increase in stock-based and employee compensation expense of $0.4 million.

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 2025 were $79,326 as compared to $150,927 for the year ended December 31, 2024. We expect that our sales and marketing expenses will increase in future periods commensurate with the expected growth of our business.

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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 our Predecessor of approximately $1.0 million, which were paid in 2024.

Depreciation and Amortization

Depreciation and amortization expenses for the year ended December 31, 2025 and 2024 were $9,837 and $6,517, respectively.

Interest Income

Interest income was $1.0 million and $0.9 million for the year ended December 31, 2025 and 2024, respectively.

Gain on Contribution to AirJoule, LLC

An equity method investment received in exchange for non-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 which represents the difference between our 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.

Equity Loss from Investment in 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, respectively.

Change in Fair Value of Earnout Shares Liability

Upon consummation of the Business Combination, we expensed $53.7 million in Earnout Shares (as described in “- Earnout Shares Liability”) liability. The change in fair value of $18.3 million and $29.2 million for the years ended December 31, 2025 and December 31, 2024, respectively, was primarily due to a decrease in the estimated fair value of the liability and recognized as gains 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 and changes in the timing of future cash flows.

Change in Fair Value of True Up Shares Liability

Upon consummation of the Business Combination, we assumed $0.6 million in True Up Shares liability. The change in fair value of the liability during the year ended December 31, 2025 was 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 an $11.8 million Subject Vesting Shares liability. The change in fair value of income of $6.6 million and $4.0 million during the year ended December 31, 2025 and December 31, 2024, respectively, was primarily due to a decrease in the estimated fair value of the liability and recognized as gains 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 and changes in the timing of future cash flows.

Change in Fair Value of Equity Line Obligation Liability

On March 25, 2025, we entered into a Equity Line Purchase Agreement with B. Riley Principal Capital II, LLC. See Note 2 - Liquidity and Capital Resources. During the year ended December 31, 2025, we recognized a $(0.5) million change in the fair value of the related liability, primarily driven by the initial recognition of the liability at fair value upon inception of the agreement and subsequent activity under the facility, including sales of common stock.

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Income Tax Benefit (Expense)

Income tax benefit (expense) was $18.3 million and $(81.3) million for the year ended December 31, 2025 and 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’s 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 generating net proceeds of $14.2 million.

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 December 31, 2025, 755,946 shares were sold under the Equity Line Purchase Agreement generating proceeds of approximately $3.0 million.

Capital Contributions

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

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