Rain Enhancement Technologies Holdco, Inc.

Item 1. Description of Business

Overview

Rain Enhancement Technologies, Inc. (“RWT”) was founded to provide the world with reliable access to water, one of life’s most important resources. To achieve this mission, RWT aims to develop, manufacture and commercialize ionization rainfall generation technology.

Today, water scarcity issues are one of the world’s foremost concerns. According to the World Wildlife Fund, 1.1 billion people globally lack access to water for basic necessities, and, according to the American Geophysical Union, 80% of global croplands are expected to experience water scarcity by 2050, threatening agricultural yields.

RWT is combining unique expertise, personnel, and weather data to develop, improve and undertake efforts to commercialize ionization rainfall generation technology that enhances rainfall when conditions are appropriate in the atmosphere. RWT plans to build its core platform with software, meteorology, hardware, product design and operations to make rainfall generation more dependable. RWT intends to improve on existing rainfall generation technologies by introducing robust measurement tools, including automation technology, rain gauges, and weather stations, to more precisely quantify the positive water benefit it expects to deliver to millions globally.

RWT is working to develop, invent, improve, manufacture, commercialize and operate technologies that enhance rainfall and elevate water reserves. We believe that RWT’s future technology will yield potable water that can be used for all purposes. The projected cost (not including land costs, which are still being determined) and energy requirements for RWT’s future technology are modest on a per gallon basis for communities and ecosystems, estimated to be $0.10 per cubic meter, approximately 10 times less than other alternative technologies. RWT intends to enhance agricultural, industrial and household water supplies for all the communities in which it operates by developing technology and services to serve governmental and commercial clients’ needs in creating water resiliency and abundancy.

RWT’s business model is based on a unique one-to-many community-centric business model. The numerous client segments to which RWT markets and sells include large landowners including agriculture, resorts, energy and transportation companies, insurance and reinsurance companies, decarbonization initiatives of major corporations and philanthropists, supranational governmental organizations, and city, county, state, federal and non-U.S. governments. In addition, RWT aims to leverage its offerings and enhance its proprietary position by expanding RWT’s water generation products through licensing and acting as a channel partner for additional water generation technologies.

RWT has a limited operating history and has not yet generated any revenue, and its ability to generate revenue sufficient to achieve profitability will depend on its ability to successfully build and commercialize rainfall generation technology.

RWT’s management and expected members of the Board include individuals with extensive experience in the water technology industry, which will offer RWT advantages, both in terms of its research and development and the commercial value of its intended product offerings.

RWT’s website can be found at https://rainwatertech.com/.The references to the SEC’s and our website are inactive textual references only, and information contained therein or connected thereto is not incorporated into this Annual Report.

RWT’s Strategy

RWT’s mission is to provide the world with reliable access to water at a time when water scarcity is one of the world’s foremost concerns. RWT intends to fulfill its mission by:

Industry Background: Ionization Rainfall Generation

History and Development of Core Technology

RWT’s ionization rainfall generation platform will capitalize on approximately 70 years of technological efforts beginning in the 1950s at one of the largest industrial conglomerates in the United States. Ionization rainfall generation technology has been used for fog dissipation during the cold war, as well as rainfall generation and hail reduction in a number of locales over the decades. Weather forecasting models, computing power plus ground-based radar networks have allowed weather forecasting to improve exponentially over the past decade. Cloud condensation nuclei and the water cycle are now broadly accepted science. Water scarcity has unfortunately reached critical levels throughout North America and Europe. Federal and local governments, and Fortune 500 companies all recognize the urgency of action as water becomes a social justice issue.

Traditional cloudseeding involves the use of chemicals dispensed from aircraft at precise moments of raincloud formation, creating potential risks (such as environmental concerns and unintended downstream consequences, for example, small concentrations of chemical substances affecting cloudseeding-produced rain). Desalination plants offer an alternative technology for increasing the supply of potable water but such process is highly energy intensive, expensive and requires transportation from the coast to inland clients.

Ionization rainfall generation technology allows for lower operating costs at scale and provides a method that does not use chemicals in the rainfall generation process. Both chemical and ionic approaches have been utilized for weather modification, including rainfall generation, hail reduction, and cloud dispersal.

Historically, piloted aircraft (e.g. cropping) or drones delivered chemicals into clouds at the right time in order to enhance rainfall. However, ionized rainfall generation technology is ground-based, capitalizing on natural updraft airflow. Based on third party trials in Oman, the operating range of RWT’s ionized rainfall generation equipment is expected to be considerable, as it will be reliant upon natural updrafts to carry the ions into clouds with sufficient water vapor to condense and form rain droplets. Such third-party testing has demonstrated that the equipment’s reliance on natural updrafts would result in it being powered by a minimal source of energy, approximately 600kWh annually based on 100 hours of operation per month, which is approximately the amount required in one year by an average household oven. Moreover, as the technology is developed, RWT intends to continue working on ways to maintain low and efficient energy usage.

Ionized rainfall generation technology does not allow rainfall to be created. It may enhance the amount and possibility of rainfall when conditions are appropriate in the atmosphere and cloud formation is underway in an approximately 40-mile radius, according to third-party testing. The third-party experiments in Oman, using ionizers based on existing rainfall generation technology, indicate that the majority of the rainfall generation occurs within approximately 60 miles of the ground-based ionizers. This range allows for placement of the equipment to optimize for the cost of land leases, as well as predominant wind flows.

By installing multiple systems at appropriate ranges away from the desired impact area, RWT’s approach would allow for enhanced rainfall with high level, broad-based targeting, by synchronizing the ionization on-off with increasingly accurate weather information and forecasting. RWT is in the process of partnering with ground-based radars and satellite imaging for optimal and powerful real time weather forecasting data access.

In addition, RWT expects that its systems will be able to be manufactured and installed in approximately four to six months, which differs from the desalination process that generally takes several years to obtain permits and build associated energy generation. RWT believes that the expected rapid time-to-market and anticipated use of off-grid solar and wind power systems will provide an advantage in addressing water scarcity in the coming decades.

Initial installation would be more costly than the cloudseeding approaches and requires a small amount of semi-permanent land to operate from. However, RWT’s system would be able to operate continually up to 365 days per year, and key post-installation costs would be modest, including electricity and monitoring. Once installed, the system is expected to use approximately 600 kwH of energy consumption per year. Reliance on natural updrafts would limit targeting but would minimize energy use and avoid using chemicals in the rain enhancement process. Ultimately, some of the water that condenses due to RWT’s operation will come out of nearby oceans per the established “water cycle”.

In Oman, over a six-year randomized third-party trial from 2013 to 2018, an ionization rainfall generation system based on existing technology generated an average of approximately 16% of additional rainfall according to results published by the National Institute for Applied Statistics Research Australia (“NIASRA”), a third-party research organization, in the International Statistical Review. Three years after this trial occurred, news reporters in Oman continued to report enhanced rainfall as compared to prior years when the hardware was not operating. In addition, trials performed by third-party individuals funded by the National Key Research and Development Plan of China and the National Natural Science Foundation of China in the Wushaoling and Liupan Mountains in China also indicate that an ionization rainfall generation system helped increase rainfall in the area by 20%. RWT believes significant improvements from software, synchronization with real-time weather, and broader placement would lead to even greater rainfall generation. Furthermore, RWT believes it can create an ionization rainfall generation team that will be well capitalized, with the full suite of expertise required, to commercialize and scale ionization rainfall generation.

Commercialization and Scale of Ionization Rainfall Generation Technology

Ionization rainfall generation technology has shown promise in third-party trials, and thus commercialization and scale of this technology will require a strong go-to-market and operations infrastructure to show the market the rain enhancement capacities of these systems. The first phase of commercialization is expected to include leveraging RWT’s management and Board to develop global sales organizational structures and methodologies, as well as building operations, sales, marketing and customer service functions to accelerate client traction. RWT also intends to create operating momentum by achieving enhanced rainfall in the initial systems that it deploys, in order to demonstrate the viability of this technology to the market. It is anticipated that this will enable RWT to expand into existing client bases, create additional client verticals, and drive future global expansion. The second phase of commercialization and scale of rainfall generation technology is expected to involve investment in additional technologies to optimize the performance of the systems. This includes investment and development of weather forecasting models, computing power, data collection tools and ground-based radar networks, among other things, in order to improve RWT’s weather forecasting abilities. Supporting growth at scale will require manufacturing optimizations, bill of materials value engineering, and enhancing software controls and machine learning to automate the operational and data collecting processes.

For more details regarding the steps that RWT’s management team believe are necessary to commercialize and scale ionization rain enhancement technology, please see “RWT Management’s Discussion and Analysis of Financial Condition and Results of Operations - Plan of Operations.”

Trial Results Based on Existing Third-Party Technology

There is a void for institutionally supported analysis for quantifying rainfall generation from rainfall generation technology. Previous rainfall generation trials by third parties relied on comparisons of trial results with long-term averages of rainfall on a given catchment. However, the high variability of rainfall data has hindered conclusive demonstrations of efficacy using such techniques. Demonstrating efficacy, however, will rely on statistical evaluation of data obtained while operating the technology under real-world scenarios.

In the third-party trials for previously existing rainfall generation technology in Oman, the NIASRA employed statistical estimation methodology estimating the correlation between observations of rainfall at different locations at specific time intervals to make concurrent predictions of rainfall in a target area with both a control model and effects model to assess the ground-based ionization technology performance. The NIASRA concluded in these third-party trials that the methodology used is well instrumented and scientifically rigorous, and that it has the potential to increase precipitation. Third-party trials in Oman have indicated a high probability of rainfall generation if ionization rainfall generation technologies are used.

In 2022, the model-based approach used in these third-party trials was noted in the Journal of Royal Statistical Society and the International Statistical Review. The results in these third-party trials demonstrate the plausible practical effects of and plausible analysis methods for the technology that RWT intends to develop.

RWT’s Business Overview

Ionization Rainfall Generation Market Opportunity

The global water crisis has massive economic implications. Global health organizations estimate that water scarcity in some regions could impact GDP by up to 6% with $260 billion lost globally each year due to lack of basic water and sanitation. Morgan Stanley estimates that $1.4 trillion will be invested in expanding and improving global water infrastructure over the next four years. RWT’s economic impact is intertwined with the number of people it can help get access to water they would have otherwise not received, allowing it to capture a significant portion of the impending water spend.

Unlike with the price of fossil fuel commodities, where governments can step in to shield consumers from volatility, water cannot easily be manufactured at large scale. For instance, due to droughts there are cities in California’s Central Valley whose access to water is severely limited, with populations relying upon emergency bottled water handouts to survive. Water tables continue to decline across the West, South and Southwest of the United States to near-emergency levels, and the price of water has climbed.

RWT’s ionization rainfall generation platform is expected to create large new markets due to its low energy consumption, ease of operation, and large area impact. With a low entry price for access, demand from all client segments is anticipated to grow strongly, indicated by both initial client data points as well as the past decade of trials in Oman. RWT’s planned technological approach of ground-based ionization stations is expected to allow it to implement a one-to-many community-centric business model, as described above under “RWT’s Strategy.” Numerous clients can be sold services off of the same hardware platform. RWT intends to create new markets to commercialize and scale ionization rainfall generation by bringing down the cost of its technology, reducing friction to access, and continually improving its technology and capabilities.

RWT intends to pioneer and create a new market for enhanced rainfall. RWT is beginning its sales focus in the United States with the intent to expand to Canada and Western Europe, and take advantage of new opportunities that may present themselves in any region. By setting up its ionization rainfall generation systems in areas with many constituent potential clients, it expects to be able to sell up to a dozen segments of user benefits from the same hardware array. Small improvements in annual rainfall make significant differences to industries such as insurance, agriculture and resorts.

RWT recognizes that increasing the water table, potable water reserves, and greening urban and suburban areas are another way to attract clients, while making a positive operating contribution with as few as one client per site. RWT is targeting commercial clients in each operating area, and adding potential governmental and philanthropic clients as the business develops.

RWT’s Business Model

RWT’s strategy consists primarily of a focus on ground-based ionization stations to implement a one-to-many community-centric business model, as described above under “RWT’s Strategy”.

For its initial enhanced rainfall business, RWT plans to invest in the development and improvement of ground-based ionization stations, hardware platforms and technologies to enable enhanced rainfall. Leveraging its extensive design, simulation and prototyping capability, it intends to set up its ionization rainfall generation systems in areas with many constituent potential clients, allowing it to sell its technology to numerous segments of users who will all benefit from the same hardware array. Small increases in annual rainfall make significant differences to industries such as insurance, agriculture and resorts, and RWT aims to partner with leaders throughout these diverse client segments to develop, demonstrate, optimize, commercialize and license its technologies.

To increase the likelihood that its technologies are adopted, RWT plans to lead with the development of its technology and then determine reasonable royalties. Successful negotiation of these royalties is generally dependent on:

Rainfall generation technology integrates several advanced engineering and scientific disciplines, and the resulting products are of interest in a broad variety of application domains. As such, RWT continues its ongoing development of strong technical and business relationships with both current and prospective clients across diverse industries. Those client relationships provide not only a source of ongoing and growing revenue but also insights into industry trends that will help RWT build desirable products. For instance, RWT plans to pioneer new technologies for image processing and object recognition, while staying apprised of potentially relevant technical advances from elsewhere.

RWT’s business model will allow for affordable installation and manufacturing costs, expected to initially be approximately $280,000 per system, and an all-in cost of approximately $425,000 that includes labor, a meteorologist and other related costs. We expect these initial administrative, setup and manufacturing costs to include, among other expenses: power systems, control systems, all the fiber-reinforced plastic and steel work, shipping and inspections. This entry level installation price point will allow clients to be “laddered up” with a “land and expand” sales strategy, which will also involve continued involvement with RWT as it expects to be the sole operator for its rainfall generation services.

RWT intends to develop and improve software and machine learning control systems to provide more specific area targeting, as well as more precise operating timing. We believe that RWT’s prospective partnerships for proprietary radar and weather data will give it client segmentation and pricing opportunities. Wherever possible RWT will endeavor to strike multi-year WaaS (“water as a service”)-like client contracts.

Commercialization of Water Technology

RWT has pulled together ingredients to commercialize and scale ionization rainfall generation. RWT also intends to acquire and license adjacent technologies that expand its solutions offering to clients. Its management have experience scaling businesses over the prior decades. R&D leadership and technology is important; however the RWT team knows that operations, sales, marketing, and client service are equally vital to drive product-market fit at scale.

RWT also has a global hiring and relationships network to tap into to promote the acceleration of its channel and client traction. It is implementing best in class global sales organization structures and methodologies. By adding adjacent technologies over time, RWT expects to leverage a unified global sales team in the hundreds to sell multiple solutions to the same client base, increasing its presence with clients as well as drive bottom-line margin contribution.

RWT recognizes that long term success is about client satisfaction and delivering solution efficacy and reliability. Manufacturing optimization, build-of-material value engineering, and the generation of software controls and machine learning are all expected to play vital roles in driving sustained and profitable growth. RWT also is negotiating partnerships with global manufacturing, supply-chain firms to ensure the smooth rollout of its ionization rainfall generation systems worldwide.

As part of its commercial strategy, RWT intends to negotiate agreements with various resorts across the Americas and Western Europe to utilize RWT’s technology to build up the water tables around these resorts. Success in these initial agreements will allow RWT to leverage its success to a number of different resorts and properties worldwide.

Manufacturing

RWT plans to involve a set of manufacturing partners that have previously manufactured versions of RWT’s technology in Australia, along with a list of similar manufacturing partners in the United States.

RWT’s apparatus design will be optimized to be modular, resulting in a high level of consistency and predictability with each build. The initial design is projected to weigh about 4,000 kilograms (8,000 pounds), and be shipped in four large crates. It will require a crane and some on site general contractor project management to pour a concrete pad for the footings. The power necessary to operate the system is expected to be generated by off-grid solar and wind power systems, for which a small array will typically suffice (however, batteries may be used depending on daylight and weather conditions). We believe that the apparatus will be capable of being assembled with several people and a crane in only a few days.

The largest components are custom manufactured from Fiber Reinforced Polyester (“FRP”) to form the non-conductive legs of the system by a third-party manufacturer experienced in large scale FRP work (e.g. chemical tank manufacturers). The antenna components will largely be made from Pultruded and sheet FRP by RWT in-house. Additional pultruded FRP is used to form braces and ancillary components, along with custom machined nylon. Some steel fabrication is completed for adapters and supports, including the footing sections and winching components to raise and lower the system. The systems are pre-assembled by RWT prior to shipping to customers to ensure all components fit, meet quality assurance requirements and form a complete “ready-to-install” system in kit format.

The main components to be sourced will be steel and FRP, along with readily available controllers, high voltage insulators, electronics, metal and nylon fasteners. RWT intends to develop and incorporate into the machines advanced technology, including systems integration and artificial intelligence to improve predictability of location and timing of enhanced rainfall.

RWT plans to do its own sourcing for the materials required to operate its products and intends to maintain a small inventory in its own leased warehouse. RWT expects to work with clients and their general contractor partners for installation plans for each device to suit the final selected site.

Clients

RWT’s business model is based on a unique one-to-many community centric business model. We initially intend to focus primarily on geographic areas in North America and Western Europe, before further global expansion. The various client segments where RWT intends to sell to include, among others:

Large landowners have the benefit of controlling the land for ionization rainfall generation equipment deployment and its measurement using automated rain gauges, as well as benefitting from the entire rainfall generation. Large landowners who are willing to provide positive externalities to land adjacent to them are anticipated as early adopters of RWT’s services.

We think energy and transportation companies will also benefit in a very binary manner from enhanced rainfall, as they often cannot operate without sufficient water levels. RWT’s business plan contemplates that these companies will be willing to pay an annual sum to subscribe to and utilize RWT’s services to maximize their operational capacities.

In another segment, we plan to enter into arrangements (which currently do not exist) that will allow insurance premiums to be reduced for homeowners in regions taking active measures to enhance rainfall. The added benefit to such homeowners comes in the form of decarbonization contribution, habitat expansion and greening.

Governments are a typically slower sales cycle, however at all levels are capable of including an annual allowance for rainfall generation, which we expect would be a longstanding budget item once adopted.

Supranational organizations such as the World Bank and IFC have the ability to commit to sizable programs for improving water reserves, the water table and potable water (although there can be no assurances that they will do so). Both developed and emerging markets are in need of RWT’s technology and we anticipate significant traction in this category.

Sales and Marketing

RWT’s sales activities focus primarily on rain enhancement services to public clients and commercial markets, as well as water conservation consulting and solutions. In the future, RWT plans to expand its sales activities to other water generation technologies, such as desalination, wastewater treatment, water purification, mineral extraction and cloudseeding, among others. Product marketing focuses on identifying the needs and product requirements of its clients. Product marketing also manages the development of all of its technologies throughout the development cycle and creates the required marketing materials to assist with the adoption of the technologies to its various client segments.

Principal Factors Affecting Barriers to Entry & Competitive Landscape

Barriers to Entry

There are a number of barriers to entry in the ionization rainfall generation industry, including, among others: (a) key technical personnel, (b) scientific expertise to drive development and improvements of technology (including software and machine learning automation), (c) client relationships/contracts, (d) manufacturing and supply chain efficiencies, (e) key sales & marketing personnel, and (f) brand awareness. Another barrier to entry involves market expansion, specifically with respect to expanding our services from initial trials into clients including, among others, commercial clients, land developers and the agricultural sector.

Competitive Position

The operating competitive landscape has minimal to no brand awareness amongst clients, and is comprised of primarily players in the following categories: (i) mature industrial/chemicals/wastewater, (ii) cloudseeding startups, (iii) adjacent water startups, and (iv) existing governmental operations. As with every vibrant pioneering technology ecosystem, several startups in the water technology sector have ceased operating over the years, however we also expect to see other competing technologies emerge.

The capital raised from the Business Combination will provide RWT with some of the funding necessary to drive growth both organically and inorganically. We plan to acquire and/or license adjacent technologies and add them to the product portfolio of RWT. We intend to implement best practices for structuring compensation to help retain all key technical and client-facing talent.

We anticipate that being the first publicly traded rainfall generation firm can facilitate growth in client momentum, due to the enhanced visibility and higher caliber of employees RWT can attract with liquid equity instruments. RWT expects that having an acquisition currency will also allow it to outcompete private competitor companies in terms of inorganic growth opportunities.

Holdco’s listing on Nasdaq is a considerable advantage over smaller private companies in the water technology sphere. RWT also aims to retain the advantages of a nimbler startup over long-established industrial players. Moving quickly to capitalize on innovations and unlock new client demand is expected to be a hallmark of RWT’s approach given its team’s track record.

RWT has begun operations with a clear eye on value engineering, manufacturing scale and optimizations, as well as a world class software and machine learning team. RWT is currently negotiating a near-shore supply chain to minimize lead time and shorten turnaround times for new innovation, and it intends to have R&D and manufacturing all in the same building.

While the current iteration of the rain enhancement systems that RWT initially plans to install will not require additional R&D, as they have been proven to work in third-party trials, RWT intends to invest in significant research and development in order to commercialize and scale the technology. In particular, the current systems require local support personnel to operate the devices, and require manual reading of rain gauges and manual analysis of the statistics derived from the weather data. Accordingly, in order to scale and commercialize the business, RWT plans to engage in R&D to automate these functions, as well as to develop and adopt new ways of delivering the ionization aerosols from the systems to allow the technology to be deployed in the widest possible field conditions. For more information on the steps, technological developments and improvements that RWT will need to make to the rain enhancement technology in order to bring advancements to the systems to market, please see “RWT Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in particular the sub-headers “-Investment in Research and Development (R&D), Innovation and Technology”, “-Development and Enhancement of Proprietary Technology”, and*“- Plan of Operations*”.

Integrating the latest weather forecast techniques and data, along with automated control systems and water gauge measurements will enable continual improvement of any existing generation of hardware in the field.

RWT management estimates that each equipment site is expected to break even on approximately $1 million of annual revenue on a cash flow basis (with hardware costs factored in year one), plus operating costs. Multi-year contracts will be sought to make it difficult for new entrants to win market share. RWT’s business model will be focused on achieving long term client lock-in through SaaS-like, multi-annual contracts.

Moreover, there are several approaches to rainfall generation besides RWT’s approach. There are companies developing and commercializing chemical-based cloudseeding technologies. These companies utilize traditional cloudseeding technology, which involves the use of chemicals such as silver iodide, potassium iodide and dry ice that are dispensed from aircrafts at precise moments of raincloud formation creating potential risks and unintended consequences. Compared to the traditional chemical cloudseeding approach, RWT’s ionization rainfall generation approach does not use chemicals in the rain enhancement process. Moreover, we think that RWT’s ionization rainfall generation could enjoy lower operating costs than traditional chemical cloudseeding. Lastly, the difference between RWT and these companies lies in the expertise in operations and leading team of water entrepreneurs that provides RWT with a competitive advantage.

Proceeds of the Business Combination

As described in more detail elsewhere in this Annual Report, the Business Combination between Holdco, RWT, Coliseum, and Merger Sub closed on December 31, 2024. The gross funds available upon the Closing was approximately $9.0 million. The parties to the Business Combination incurred an aggregate of approximately $11.6 million of transaction expenses. At the Closing, the Company paid an aggregate of approximately $8.9 million of transaction expenses, and deferred the remaining $2.7 million. Following the payment of transaction expenses, the net cash available to the Company from the Business Combination was approximately $0.1 million.

In connection with the Closing, the Company also recorded a subscription receivable of $650,000 from two PIPE Investors for the purchase of 57,083 shares of Class A Common Stock. On January 29, 2025, the Company closed $500,000 of such subscription receivable pursuant to the terms of subscription agreements (collectively, the “PIPE Subscription Agreements”) between the Company and certain investors (the “PIPE Investors”) and issued an aggregate of 43,910 shares of Class A Common Stock to the PIPE Investors. On February 6, 2025, the Company closed on the remaining $150,000 of subscription receivable pursuant to the PIPE Subscription Agreements and issued an aggregate of 13,173 shares of Class A Common Stock to the PIPE Investors. Additionally, the Company has a $7 million loan agreement (the “Loan Agreement”) from an affiliate of Harry You, subject to the terms and conditions of the Loan Agreement, of which $839,000 has been borrowed as of the date of this Annual Report. The Company may seek additional sources of capital, but there can be no assurance that additional financing will be available to the Company on favorable terms or at all. See “Risk Factors – the Company will need additional capital to pursue its business objectives and respond to business opportunities, challenges or unforeseen circumstances, and it cannot be sure that additional financing will be available.”

RWT’s primary use of proceeds from the Business Combination will be to support the development and organic growth of its ionization rainfall generation platform. Additional water technologies can be acquired or licensed provided a significant margin of error is maintained on reaching profitability on the ionization rainfall generation.

Approximately equal components of investment are expected in building RWT’s sales and marketing infrastructure, as its technical (hardware, software, physics and engineering) and operations (client, install, maintenance and manufacturing) talent. Attracting and retaining the leading talent in the world, and manufacturing and installing its hardware will be the primary use of capital through breakeven.

Additional rainfall generation technologies, as well as adjacent desalination, wastewater treatment, water purification, mineral extraction, cloudseeding and other water generation services may be considered for inorganic expansion.

RWT management currently estimates approximately $6.3 million and approximately $62 million in expenses for its one-year and five-year business plan. Prior to the Closing, RWT management determined that RWT would be able to execute on its operating plan for at least the next 12 months following the Closing if RWT received at least $10 million in proceeds from the Business Combination, after giving effect to redemptions of Public Shares but before the payment of transaction expenses. Because the Company received $9 million in gross proceeds from the Business Combination before the payment of transaction expenses, the Company has adjusted production ramp-up in order to align the associated cash requirements, especially for working capital, with actual timing and/or realized proceeds of the Business Combination. Adjustments have been made by reducing or shifting planned operational costs and R&D investments, on a short-term basis, until additional funding is obtained. RWT management has determined that the RWT system’s design is complete, requiring no additional R&D in the near-term, and that the main cash requirement for operations in the next 12 months will be staffing and operations. As of December 31, 2024, the Company had approximately $37,000 in cash. Additionally, the Company has a $7 million Loan Agreement from an affiliate of Harry You, of which $839,000 has been borrowed as of the date of this Annual Report. However, we cannot assure you that the Company will not need additional sources of capital to operate its business in the next 12 months, or that it will be able to obtain additional capital for its five-year business plan. See “Risk Factors - RWT will need additional capital to pursue its business objectives and respond to business opportunities, challenges or unforeseen circumstances, and it cannot be sure that additional financing will be available.”

For more information, see “RWT Management’s Discussion and Analysis of Financial Condition and Results of Operations - Plan of Operations - Summary of Milestones and Material Cash Requirements.”

Government and Other Regulations

RWT expects its technology will be subject to certain environmental and governmental regulations. Certain jurisdictions have codified regulations around cloudseeding that may subject RWT’s rainfall generation platforms to certain licensing and permitting requirements. For instance, the Texas Department of Licensing and Regulation regulates the use of cloudseeding through a licensing and permitting procedure codified in the Texas Weather Modification Act. Furthermore, the use of certain materials for seeding purposes will likely be subject to governmental and other regulations. For more information, see “Risk Factors - Risks Relating to Regulatory and Legal Matters”.

Research & Development

RWT’s research and development groups will work closely with its sales and marketing groups, as well as its clients and partners, to bring its products to market in a timely, high-quality and cost-efficient manner. RWT expects research and development costs to total approximately $2.2 million per year.

RWT has a roadmap of technological developments and improvements it plans to undertake, including optimizing the electrical and mechanical components to maximize the number of ions produced, improving the design for cost, installation, and attaining the maximum number of ions aloft and directionally into the cloud layer. RWT also intends to develop and improve software and machine learning control systems to provide more specific area targeting, as well as more precise operating timing. We are developing a roadmap of software features to optimize power consumption, improve serviceability and reduce site visits, as well as to integrate with third party weather-data sources.

In its ionization rainfall generation business, RWT will invest in world-class R&D supported by strong relationships. RWT aims to offer advantages in generation rainfall technology, providing distinctive features, low-energy technology, ease of operation and large area impact to its clients. RWT further intends to license and act as a channel partner in additional water generation technologies. RWT intends to have relationships with an assortment of water technology partners, whose licensed technologies include cloudseeding, water purification, and mineral extraction, among others. RWT intends to license these technologies and introduce them to its already established clients and prospective clients.

Intellectual Property

RWT is focused on building a strong scientific roadmap to underpin an analytical understanding with meaningful predictive power of its ionization rainfall generation platform. The principles have been observed for many decades, however RWT expects it will be the first company to fully control the plasma and fluid dynamics underpinning rainfall generation. RWT has also obtained a worldwide, perpetual, exclusive license under certain patents from Dr. Theodore Anderson, a distinguished plasma physicist and author ofPlasma Antennas. RWT intends to build its IP portfolio with the hopes of creating robust growth.

RWT intends to evaluate intellectual property portfolios for purchase in the fields of water generation technology, scientific validation and causal inference. Its evaluation criteria for patent acquisitions will include, for example: the sales and profitability of the relevant products, its view of the prospects of the market for the relevant products, size of the portfolio, legal criteria and its assessment of the likelihood of obtaining negotiated licenses.

RWT has the capital and experience to drive continued innovation and protect its inventions via a patent strategy that will create defensibility around fundamental, proprietary technologies, business processes and methodology. RWT will aim to build its patent portfolio in the United States with cross filings in the European Union. Both a defensive and offensive approach will be incorporated to its investment in this arena.

RWT intends to protect its future intellectual property rights via a combination of patent, trademark, and trade secret laws in the United States and other jurisdictions, as well as with contractual protections, to establish, maintain and enforce rights in its proprietary technologies.

In addition, RWT intends to protect its future intellectual property rights through non-disclosure and invention assignment agreements with its employees and consultants and through non-disclosure agreements with business partners and other third parties.

Employees and Human Capital Resources

RWT’s employees will be critical to its success. RWT is proud of its world-class team and seeks to hire employees dedicated to its focus on developing and commercializing the best ionization rainfall generation technology.

RWT’s full-time employees are expected to be primarily based in Naples, Florida, though some employees may be working remotely. RWT also plans to engage a small number of consultants and contractors to supplement its permanent workforce. As of the filing date of this Annual Report, RWT has three independent contractors and one full-time employee, the Chief Executive Officer. It has retained a Chief Financial Officer as a consultant on an interim basis. RWT also plans to hire a Chief Technology Officer, and two additional employees with sales, operations or climate expertise. RWT’s employees are engaged in research and development, business development, sales and delivery of its products and services.

To date, RWT has not experienced any work stoppages and maintains good working relationships with its personnel. None of RWT’s employees are subject to a collective bargaining agreement or are represented by a labor union at this time.

Properties

RWT’s principal executive office is, and its corporate headquarters are expected to be, located in Naples, Florida. In order to accommodate anticipated growth and to recruit and retain top talent, RWT anticipates seeking additional facilities in various locations. RWT anticipates it will be able to obtain additional space as needed under commercially reasonable terms.

Corporate Structure

As described above and contemplated by the Business Combination Agreement, the Business Combination was consummated via a multiple-merger structure (also known as “double dummy”), consisting of the SPAC Merger and the Company Merger. Under this structure, upon the consummation of the Business Combination, Holdco became the public company listed on Nasdaq and each of RWT (as the surviving entity of the Company Merger) and Merger Sub 1 (as the surviving company of the SPAC Merger) are wholly-owned subsidiaries of Holdco. Accordingly, the business of developing, improving, and commercializing ionization rainfall generation technology will continue to be conducted by RWT as a subsidiary of Holdco.

Under the Holdco A&R Articles, Holdco may engage in any and all lawful business for which a business corporation may engage in under the MBCA. In the future, Holdco may acquire additional businesses or assets which may or may not be complementary to the RWT business. If Holdco acquires a business or assets that are not complementary to the RWT business, such business or assets may not be able to leverage our existing infrastructure or operational experience, which may increase the costs and risk associated with such acquisitions, and we may determine in connection with such acquisition or afterward to separate the ownership of such business or assets from that of RWT through a spin-off, split off or otherwise of RWT or of such business or assets. See the section entitled “Risk Factors - Holdco may invest in or acquire other businesses in the future, which may or may not be complementary to the RWT business. Investing in or acquiring other businesses will require the devotion of a significant amount of time and resources, may not be successful, and could negatively impact Holdco’s results of operations, financial condition and liquidity.”

Legal Proceedings

From time to time, Holdco and RWT are expected to be involved in certain claims and legal proceedings arising in the normal course of business. While the resolution of these matters cannot be predicted with certainty, Holdco and RWT do not believe, based on current knowledge, that the outcome of any currently pending legal proceedings in which Holdco or RWT is currently involved will have a material adverse effect on Holdco’s consolidated financial position, results of operations or cash flow.