Note 11 — STOCK-BASED COMPENSATION

Legacy Montana Options

On April 5, 2023, Legacy Montana granted 383,151 options, as converted, exercisable for Class A common stock to key team members of Legacy Montana. The options immediately vested, had an exercise price of $0.49, as converted, a term of seven years, and a grant date fair value of $0.14, as converted. The Company used the Black-Scholes option pricing model to estimate the fair value of stock options. Fair value was estimated at the date of grant.

During the year ended December 31, 2024, Legacy Montana option holders exercised their options to purchase a total of 2,302,830 shares of Class A common stock, as converted, for a total purchase price of $130,696.

During the year ended December 31, 2025, Legacy Montana option holders exercised their options to purchase a total of 296,065 shares of Class A common stock, as converted, for a total purchase price of $99,717.

As of December 31, 2025, of the 878,022 Legacy Montana options that are outstanding, 535,955 options expire on December 7, 2030, 71,395 options expire on March 15, 2031, 60,672 options expire on April 4, 2030 and 210,000 options expire on April 8, 2031.

2024 Incentive Award Plan

On March 8, 2024, the holders of XPDB common stock considered and approved the Montana Technologies Corporation’s 2024 Incentive Award Plan (the “Incentive Plan”), which became effective immediately upon the Closing on March 14, 2024. Under the Incentive Plan, the Company may grant equity and equity-based awards to certain employees, consultants and non-employee directors award, such as, (a) Incentive Stock Options (granted to employees only), (b) Non-Qualified Stock Options (“NSOs”), (c) Stock Appreciation Rights, (d) Restricted Stock Units (e) Restricted Stock, (f) dividend equivalents and (g) other stock and cash-based awards of the Company (“Incentive Awards”). The sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with ASC 718, or any successor thereto) of awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year of the Company may not exceed $500,000 (or, with respect to the first fiscal year of the Post-Combination Company during which a non-employee director first serves as a non-employee director, $1,000,000). Options granted by the Company typically have a maximum contract term of ten years. RSUs with service-only conditions granted by the Company typically vest over a three or four year period. As of December 31, 2025, there were 4,892,118 shares of common stock available for future issuance under the Incentive Plan.

2024 Employee Stock Purchase Plan

The 2024 Employee Stock Purchase Plan (the “2024 ESPP”) became effective immediately upon the Closing on March 14, 2024 and as of December 31, 2025, a total of 1,621,743 shares of common stock are reserved for issuance under the 2024 ESPP. Eligible employees may purchase shares of common stock under the 2024 ESPP at 85% of the lower of the fair market value of the Company’s common stock as of the first or the last day of each offering period. Employees are limited to contributing 15% of the employee’s eligible compensation and may not purchase more than $25,000 of stock during any calendar year or more than 12,000 shares during any one purchase period. The 2024 ESPP share reserve automatically increases on January 1st of each calendar year, for ten years, commencing on January 1, 2025, in an amount equal to 1% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Board may act prior to January 1st of a given year to provide that there will be no January 1st increase of the share reserve for such year or that the increase in the share reserve for such year will be a smaller number of shares of common stock than would otherwise occur pursuant to the preceding sentence. On January 1, 2026, the share reserve increased by 612,072. There were 11,756 shares issued under the Company’s 2024 ESPP for aggregate proceeds of less than $0.1 million during the year ended December 31, 2025.

The related income tax benefit recognized was $0.2 million.

Stock Options

During the year ended December 31, 2025, 69,124 options were granted. As of December 31, 2025, the unrecognized compensation cost for options issued and then outstanding was $1.9 million and will be recognized over an estimated weighted-average amortization period of 2.43 years. The total intrinsic value of options exercised during the year ended December 31, 2025 and 2024 was $1.7 million and $0.7 million, respectively. The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2025 was $3.3 million.

Restricted Stock Units with Service-Only Conditions

The Company recognized $2.3 million and $0.7 million of stock-based compensation cost related to RSUs with service-only conditions for the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the unrecognized compensation cost for RSUs with service-only conditions was $4.6 million and will be recognized over an estimated weighted-average amortization period of 2.19 years. The fair values of RSUs with service-only conditions are based on the fair value of the Company’s common stock on the date of the grant. The 748,852 RSUs with service-only conditions that were granted during the year ended December 31, 2025 consisted of 384,014 awards granted to employees, 145,642 awards granted to employees of AirJoule, LLC equity method investees and 219,196 awards granted to non-employee directors. The awards granted to employees and to employees of AirJoule, LLC vest as to 33.33% of the total awards granted on each of the first three anniversaries of the applicable vesting commencement date, subject to the applicable employee’s continued service through the applicable vesting date. The awards granted to non-employee directors vest as to 100% of the total awards granted on the earlier of the first year anniversary of the applicable vesting commencement date and the date of the next annual shareholders’ meeting.

Restricted Stock Units with Market-Based Conditions

The Company recognized $1.5 million of stock-based compensation cost related to RSUs with market-based conditions for the year ended December 31, 2025. As of December 31, 2025, the unrecognized compensation cost for RSUs with market-based conditions was $3.3 million and will be recognized over an estimated weighted-average amortization period of 2.00 years. The fair values of RSUs with market-based conditions are estimated using a Monte Carlo simulation model, which incorporates the likelihood of achieving the market condition. The 496,483 RSUs with market-based conditions that were granted during the year ended

December 31, 2025 consisted of 475,298 awards granted to employees and 21,185 awards granted to employees of AirJoule, LLC. These awards vest subject to certain market conditions.

The Company records expense ratably over the requisite service period, with expense determined based on the grant date fair value regardless of whether the market condition is satisfied because the awards are subject to market conditions. These awards that remain subject to market conditions are reflected at the target level, which is consistent with how expense will be recorded, regardless of the numbers of shares that are expected to be earned. The grant date fair value of the awards granted is established using the Monte Carlo simulation model. The following summarizes the assumptions used to estimate the fair value of the RSUs with market-based conditions that were granted during the year ended December 31, 2025:

Restricted Stock Units with Performance-Based Conditions

These awards vest subject to certain performance-based conditions. Stock-based compensation cost related to RSUs with performance-based conditions was reversed during the three months ended September 30, 2025 as the performance-based conditions were considered less than probable as of September 30, 2025. No stock-based costs related to RSUs with performance-based conditions was recognized during the three months ended December 31, 2025.