Line Investor. The Equity Line Obligation liability does not have a material impact on existing sources of liquidity. See further discussion in Note 3 - Summary of Significant Accounting Policies. There were no sales under the Equity Line Purchase Agreement during the three months ended March 31, 2026.
Liquidity
The Company’s primary sources of liquidity have been cash contributions from founders or equity capital raised from other investors. As of March 31, 2026, the Company had $31.4 million of working capital, including $31.1 million in cash, cash equivalents and restricted cash. The Company had restricted cash of $30,932, which represents cash deposited by the Company into a separate account and designated as collateral for a standby letter of credit in the same amount in accordance with a contractual agreement.
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 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. Pursuant to the A&R Joint Venture Agreement, the Company agreed to contribute up to an additional $90.0 million in capital contributions to the AirJoule JV following the JV closing based on a business plan and annual operating budgets to be agreed between the Company and GE Vernova.
In 2026 and 2025, the Company made capital contributions totaling $10.0 million and $17.8 million to the AirJoule JV to support productization and commercialization activities, respectively. Of the $17.8 million contributed in 2025, $5.0 million was funded through GE Vernova’s participation in the Company’s April 2025 PIPE financing transaction and therefore is treated as attributable to GE Vernova for purposes of calculating the Company’s remaining capital contribution commitment under the A&R Joint Venture Agreement. The Company’s remaining commitment for capital contributions to the AirJoule JV is $67.3 million as of March 31, 2026. See Note 4 - Equity Method Investment for further information.
Out-of-Period Adjustment
During the preparation of the Company’s condensed consolidated financial statements for the three months ended March 31, 2026, management identified an error related to the April 2025 $5.0 million contribution to AirJoule JV that was attributable to GE Vernova. The Company previously accounted for the contribution as an increase to its equity method investment balance. Upon further evaluation, the Company determined that because the Company did not receive an increase in its ownership interest or additional rights to the underlying net assets of the AirJoule JV, the $5.0 million should have been recognized as an expense in the period incurred. The Company evaluated the materiality of the error from both a quantitative and qualitative perspective in accordance with SEC Staff Accounting Bulletin No. 99, Materiality, and SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and concluded that the error was not material to any period. As a result, the Company recorded an out-of-period adjustment that reduced the Company’s investment in AirJoule, LLC by $5.0 million as of March 31, 2026 and resulted in an increase in equity loss from investment in AirJoule, LLC of $5.0 million for the three months ended March 31, 2026.
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 three months ended March 31, 2026, the Company contributed an additional $10.0 million in capital contributions to the AirJoule JV.
The Company expects to support the Company’s current business plan, including the capital contributions to fund the AirJoule JV operating requirements for at least twelve months from the date the financial statements are issued using existing cash resources and proceeds previously raised. If additional capital is required to support future opportunities or costs beyond the current business plan, the Company may seek to obtain additional financing.
Note 5 — OTHER ACCRUED EXPENSES
The following table summarizes other accrued expenses:
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
2026 |
|
|
As of December 31,
2025 |
|
Accrued payroll |
|
|
719,716 |
|
|
|
1,506,282 |
|
Professional services |
|
|
270,968 |
|
|
|
207,156 |
|
Equity Line Obligation |
|
|
114,827 |
|
|
|
150,425 |
|
Accrued other |
|
|
187,770 |
|
|
|
202,355 |
|
Total other accrued expenses |
|
$ |
1,293,281 |
|
|
$ |
2,066,218 |
|
Note 6 — RELATED PARTY TRANSACTIONS
Due from Related Party
In November 2024, the Company executed a statement of work with AirJoule, LLC, dated as of March 4, 2024, by and between the Company and AirJoule, LLC, pursuant to which the Company will provide AirJoule, LLC with engineering and administrative services. In November 2025, the statement of work was extended from its original March 2026 maturity to December 2026. Reimbursement of costs incurred during the three months ended March 31, 2026 was $0.4 million and $0.3 million of general and administrative and research and development expenses, respectively. Reimbursement of costs incurred as of March 31, 2025 was $0.4 million and $0.1 million of general administrative and research and development expenses, respectively.
Related Party Equity Transactions
The Company granted awards to the employees of AirJoule, LLC during the three months ended March 31, 2026. The number of restricted stock units granted to the employees of AirJoule, LLC was 575,495.
Note 7 — STOCKHOLDERS’ EQUITY
Warrants
As of March 31, 2026, there are 12,657,596 Public Warrants and 8,900,000 Private Placement warrants outstanding.
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
On April 23, 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 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 generating net proceeds of $14.2 million.
Equity Financing
On January 15, 2026, subsequent to the balance sheet date of December 31, 2025, the Company completed the Offering, pursuant to a prospectus supplement filed under Rule 424(b)(5) under the Securities Act of 1933, as amended.
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) 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.
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 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. 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.
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
Strategic Partnerships
TenX Exclusive Distribution Agreement
On January 7, 2026, we announced that we had entered into a binding term sheet with TenX, a UAE-based technology and infrastructure investment firm, dated as of December 2, 2025, to become our exclusive distributor of AirJoule products in the Middle East region. Under the agreement, TenX Investment will have exclusive rights to market, sell, and support AirJoule distributed water generation and industrial dehumidification systems in the countries of UAE, Oman, Qatar, Saudi Arabia, Bahrain, and Kuwait. Commercial terms are to be reflected in a definitive agreement ahead of initial commercial deployments, which are planned for late 2026. The collaboration with TenX builds upon a Memorandum of Understanding between the parties originally entered into in August 2024 and leverages TenX Investment's established relationships across government, commercial and industrial sectors in the Gulf region.
Net Zero Innovation Hub for Data Centers
In January 2026, we commenced participation in the Net Zero Innovation Hub for Data Centers technology acceleration program in Fredericia, Denmark. The program is backed by Google, Microsoft, Data4, Vertiv, Schneider Electric and Danfoss. We were selected as one of three winners, from more than seventy applicants, of the Net Zero Innovation Hub for Data Centers competition in September 2025, and we were the only US-based company and the only company focused on water solutions selected by the program. We anticipate deploying an AirJoule system in a data center facility in Europe during 2026.
Field Deployments and Demonstrations
Pescadero, California - Red Dot Ranch Foundation
In December 2025, the AirJoule JV announced a collaboration with the Red Dot Ranch Foundation for off-grid residential water solutions in Pescadero, California. Initial testing of the Core system began in January 2026 and was completed in February 2026.
Product Development and Manufacturing
During the first quarter of 2026, the AirJoule JV continued to advance the productization of our AirJoule Core and AirJoule Prime platforms at its manufacturing facility in Newark, Delaware. Development activities included finalization of the AirJoule Core product design in preparation for third-party certifications, with commercial launch targeted for late 2026, and continued assembly of the first AirJoule Prime system, which is expected to serve as an outdoor showcase unit for industrial-scale water generation customers once operational. We advanced our initiatives to reduce bill-of-materials costs through design simplification and supplier optimization across subsystems, and we are evaluating potential contract manufacturing partners in support of anticipated customer demand in 2027.
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 $0.1 million of revenue through the sale of a pre-production unit to an academy partner for research and validation purposes. No revenue was earned in the three months ended March 31, 2026.
Operating Expenses
We classify our operating expenses into the following categories:
•General and administrative: General and administrative expenses consist primarily of personnel-related expenses for our executives, consultants and advisors. These expenses also include non-personnel costs, such as rent, office supplies, legal, audit and accounting services and other professional fees.
•Research and development: Research and development expenses include internal personnel, parts, prototypes and third-party consulting costs related to preliminary research and development of our products.
•Sales and marketing: Sales and marketing expenses consist primarily of business development, professional fees, advertising and marketing costs.
•Depreciation and amortization: Depreciation and amortization expense consists of depreciation of property and equipment.
Results of Operations
The following tables set forth the results of our operations for the periods presented, as well as the changes between periods. The period-to-period comparison of financial results is not necessarily indicative of future results.
The three months ended March 31, 2026 compared to the three months ended March 31, 2025
The following table sets forth the Company’s condensed consolidated statements of operations data for the three months ended March 31, 2026 and 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
|
2025 |
|
|
Change ($) |
|
Cost and expenses: |
|
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
3,344,346 |
|
|
$ |
2,786,484 |
|
|
$ |
557,862 |
|
Research and development |
|
|
215,471 |
|
|
|
387,919 |
|
|
|
(172,448 |
) |
Sales and marketing |
|
|
45,903 |
|
|
|
14,209 |
|
|
|
31,694 |
|
Depreciation and amortization |
|
|
3,902 |
|
|
|
1,588 |
|
|
|
2,314 |
|
Loss from operations |
|
|
(3,609,622 |
) |
|
|
(3,190,200 |
) |
|
|
(419,422 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
284,665 |
|
|
|
243,024 |
|
|
|
41,641 |
|
Equity loss from investment in AirJoule, LLC |
|
|
(63,147,868 |
) |
|
|
(2,230,278 |
) |
|
|
(60,917,590 |
) |
Change in fair value of Earnout Shares liability |
|
|
1,428,000 |
|
|
|
12,832,000 |
|
|
|
(11,404,000 |
) |
Change in fair value of True Up Shares liability |
|
|
— |
|
|
|
106,106 |
|
|
|
(106,106 |
) |
Change in fair value of Subject Vesting Shares liability |
|
|
441,000 |
|
|
|
5,474,000 |
|
|
|
(5,033,000 |
) |
Change in fair value of Equity Line Obligation liability |
|
|
35,598 |
|
|
|
— |
|
|
|
35,598 |
|
Other income (loss), net |
|
|
(1,577 |
) |
|
|
1,348 |
|
|
|
(2,925 |
) |
Total other income (loss), net |
|
|
(60,960,182 |
) |
|
|
16,426,200 |
|
|
|
(77,386,382 |
) |
Income (loss) before income taxes |
|
|
(64,569,804 |
) |
|
|
13,236,000 |
|
|
|
(77,805,804 |
) |
Income tax benefit |
|
|
14,744,263 |
|
|
|
1,642,658 |
|
|
|
13,101,605 |
|
Net income (loss) |
|
$ |
(49,825,541 |
) |
|
$ |
14,878,658 |
|
|
$ |
(64,704,199 |
) |
General and Administrative
General and administrative expenses for the three months ended March 31, 2026 were $3.3 million as compared to $2.8 million for the three months ended March 31, 2025. The $0.6 million increase was primarily related to a $0.4 million increase in stock-based compensation expense, a $0.2 million increase in audit and legal fees and a $0.1 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 $0.1 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.
Research and Development
Research and development expenses for the three months ended March 31, 2026 were $215,471 as compared to $387,919 for the three months ended March 31, 2025. The $0.2 million decrease was primarily related to a decrease 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.
Sales and Marketing
Sales and marketing expenses for the three months ended March 31, 2026 were $45,903 as compared to $14,209 for the three months ended March 31, 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
Depreciation and amortization expense for the three months ended March 31, 2026 and 2025 was $3,902 and $1,588, respectively.
Interest Income
Interest income was $284,665 and $243,024 for the three months ended March 31, 2026 and 2025, respectively. This was primarily a result of the increase in our cash balance.
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 three months ended March 31, 2026 and 2025, we recognized a loss of $63.1 million and $2.2 million, respectively. The equity loss from investment in AirJoule, LLC for the three months ended March 31, 2026 was primarily as a result of the impairment to AirJoule, LLC’s in-process R&D.
Change in Fair value of Earnout Shares liability
The change in fair value of $1.4 million and $12.8 million for three months ended March 31, 2026 and 2025, 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
The change in fair value of the liability during three months ended March 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
The change in fair value of income of $0.4 million and $5.5 million for three months ended March 31, 2026 and 2025, 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 three months ended March 31, 2026, we recognized a $35,598 change in the fair value of the related liability.
Income Tax Benefit
For the three months ended March 31, 2026 and 2025, income tax benefit was $14.7 million and $1.6 million, respectively. For the three months ended March 31, 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 three months ended March 31, 2025, the effective tax rate was driven by non-deductible mark to market adjustments, state taxes and stock compensation.
Liquidity and Capital Resources
Public Offering of Class A Common Stock
On January 15, 2026, we completed a public offering of its Class A common stock, par value $0.0001 per share, or the Offering, pursuant to a prospectus supplement filed under Rule 424(b)(5) under the Securities Act of 1933, as amended.
In the 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. Total proceeds from the Offering were $22.1 million net of certain legal and other out-of-pocket expenses.
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. There were no sales under the Equity Line Purchase Agreement during the three months ended March 31, 2026.
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 three months ended March 31, 2026, 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. As of March 31, 2026, we had $31.4 million of working capital including $31.1 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.
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, 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 three months ended March 31, 2026 and 2025
The following table summarizes our cash flows from operating, investing and financing activities for the three months ended March 31, 2026 and 2025:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31, |
|
|
|
2026 |
|
|
2025 |
|
Net cash (used in) provided by operating activities |
|
$ |
(2,343,842 |
) |
|
$ |
72,246 |
|
Net cash used in investing activities |
|
|
(10,019,506 |
) |
|
|
(5,135,239 |
) |
Net cash provided by financing activities |
|
|
21,608,020 |
|
|
|
41,760 |
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
9,244,672 |
|
|
$ |
(5,021,233 |
) |
Cash Flows from Operating Activities
During the three months ended March 31, 2026, net cash used in operating activities was $2.3 million, primarily related to general and administrative and other operating expenses incurred to support the growth of our business. We expect to continue to use cash in operating activities as we continue to expand our operations.
During the three months ended March 31, 2025, net cash used in operating activities was $72,246 and primarily reflected our net income from operations and changes in operating assets and liabilities including decreases in our due from related party and accrued expenses and other liabilities accounts.
Cash Flows from Investing Activities
During the three months ended March 31, 2026, net cash used in investing activities was $10.0 million primarily as a result of our contributions made to the AirJoule JV during the period.
During the three months ended March 31, 2025, net cash used in investing activities was $5.1 million primarily as a result of our contributions made to the AirJoule JV.
Cash Flows from Financing Activities
During the three months ended March 31, 2026, net cash provided by financing activities was $21.6 million primarily as a result of the $22.2 million net proceeds from the issuance of our common stock offset by $0.5 million in deferred offering costs paid.
During the three months ended March 31, 2025, net cash provided by financing activities was $41,760 and was related to the exercise of stock options.
Contractual Obligations and Commitments
Joint Venture Agreement
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 have ever been set by CAMT’s board of directors. As of March 31, 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.
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 previously filed Annual Report on Form 10-K.
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 March 31, 2026.
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 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 opt 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.
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 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, our principal executive officer and principal financial officer concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness in our internal control over financial reporting described below.
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 in the reports that it files or submits under the Exchange Act is 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 is accumulated and communicated to 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 management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Material Weakness in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The Company identified a material weakness related to the failure to design and implement adequate internal controls to appropriately identify, evaluate and account for the financial reporting implications of complex, non-routine transactions in a timely manner.
Changes in Internal Control Over Financial Reporting
Other than the remediation efforts described below, there were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In response to the identified material weakness, we have begun implementing remediation measures designed to improve our internal control over financial reporting, including enhancing our review and evaluation processes for complex, non-routine transactions and increasing technical accounting resources.