Rain Enhancement Technologies Holdco, Inc.

Note 1 — Description of Organization and Business Operations

Description of Business

Rain Enhancement Technologies Holdco, Inc. (the “Company” or “Holdco”) was formed in Massachusetts to combine unique expertise, machine learning, and existing tools and ionization units to develop, improve and commercialize ionization rainfall generation technology. The Company plans to develop improvements on existing rainfall generation technologies by introducing robust measurement tools, including software monitoring technology, machine learning, rain gauges, and weather stations.

Business Combination Agreement

On December 31, 2024 (the “Closing Date”), Holdco, Coliseum Acquisition Corp, a Cayman Islands exempted company (“Coliseum”), Rain Enhancement Technologies, Inc., a Massachusetts corporation (“RWT”), Rainwater Merger Sub 1, Inc., a Cayman Islands exempted company and wholly-owned subsidiary of Holdco (“Merger Sub 1”), and Rainwater Merger Sub 2A, Inc., a Massachusetts corporation and wholly-owned subsidiary of Coliseum (“Merger Sub 2”) consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement, dated as of June 25, 2024 (as amended on August 22, 2024, the “Business Combination Agreement”).

Pursuant to the Business Combination Agreement, on the Closing Date, (i) Coliseum merged with and into Merger Sub 1, with Merger Sub 1 as the surviving company of such merger (the “SPAC Merger”) and (ii) following the SPAC Merger and as a part of the same overall transaction, Merger Sub 2 merged with and into RWT, with RWT as the surviving entity of such merger (the “Company Merger” and, together with the SPAC Merger, the “Mergers”), and, after giving effect to such Mergers, each of Merger Sub 1 and RWT became a wholly owned subsidiary of Holdco (the time that the SPAC Merger became effective being referred to as the “SPAC Merger Effective Time,” the time that the Company Merger became effective being referred to as the “Company Merger Effective Time,” and the time after which both Mergers became effective being referred to as the “Closing”). Following the Closing, Holdco holds all of the equity interests of RWT and Merger Sub 1.

The Business Combination was treated as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Coliseum was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of RWT issuing stock for the net assets of Coliseum, accompanied by a recapitalization. The net assets of Coliseum were stated at historical cost, with no goodwill or other intangible assets recorded.

The Company’s common stock and warrants commenced trading on the Nasdaq Stock Market LLC under the symbols “RAIN” and “RAINW”, respectively, on January 2, 2025. Refer to Note 3,Business Combinationin our Annual Report on Form 10-K filed with the SEC on April 16, 2025, for additional details.

Recent Developments

Nasdaq Compliance Notices

On February 18, 2025, the Company received written notice (the “MVLS Notice”) from Nasdaq which notified the Company that, for the 30 consecutive business days ended February 14, 2025, the Company’s market value of listed securities (“MVLS”) closed below the $50,000,000 MVLS threshold required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Rule”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company has 180 calendar days, or until August 18, 2025 (the “MVLS Compliance Period”), to regain compliance with the MVLS Rule. The MVLS Notice notes that, to regain compliance, the Company’s MVLS must close at or above $50,000,000 for a minimum often consecutive business days during the MVLS Compliance Period. The MVLS Notice further notes that if the Company is unable to satisfy the MVLS requirement prior to such date, the Company may be eligible to transfer the listing of its securities to The Nasdaq Capital Market (provided that the Company then satisfies the requirements for continued listing on that market). If the Company does not regain compliance by the end of the MVLS Compliance Period, Nasdaq staff will provide written notice to the Company that its securities are subject to delisting. At that time, the Company may appeal any such delisting determination to a hearings panel.

Also on February 18, 2025, the Company received written notice (the “MVPHS Notice”) from Nasdaq that for the 30 consecutive business days ended February 14, 2025, the Company’s market value of publicly held shares (“MVPHS”) closed below the $15,000,000 MVPHS threshold required for continued listing on Nasdaq under Nasdaq Listing Rule 5450(b)(2)C) (the “MVPHS Rule”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company has 180 calendar days, or until August 18, 2025 (the “MVLS Compliance Period”), to regain compliance with the MVPHS Rule. The MVPHS Notice notes that, to regain compliance, the Company’s MVPHS must close at or above $15,000,000 for a minimum of ten consecutive business days during the MVPHS Compliance Period. The MVPHS Notice further notes that if the Company is unable to satisfy the MVPHS requirement prior to such date, the Company may be eligible to transfer the listing of its securities to The Nasdaq Capital Market (provided that the Company then satisfies the requirements for continued listing on that market). If the Company does not regain compliance by the end of the MVPHS Compliance Period, Nasdaq staff will provide written notice to the Company that its securities are subject to delisting. At that time, the Company may appeal any such delisting determination to a hearings panel.

The MVLS Notice and MVPHS Notice are notifications of deficiency, not of imminent delisting, and have no immediate effect on the listing of the Company’s securities. The Class A Common Stock and Warrants continue to trade on Nasdaq under the symbols “RAIN” and “RAINW”, respectively.

The Company intends to actively monitor the MVLS and MVPHS between now and August 18, 2025, and may, if appropriate, evaluate available options to resolve the deficiencies and regain compliance with the MVLS Rule and MVPHS Rule. While the Company is exercising diligent efforts to maintain the listing of its securities on Nasdaq, there can be no assurance that it will be able to regain or maintain compliance with Nasdaq listing standards.

Going Concern Consideration

In connection with the Company’s assessment of going concern considerations in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Classification (“ASC”) Subtopic 205-40, “Presentation of Financial Statements - Going Concern,” the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This assessment considers the Company’s current cash position, projected cash requirements, and its ability to obtain additional funding.

As of June 30, 2025, the Company had approximately $16,000 in cash and had a working capital deficit of approximately $8.3 million. The Company expects to continue incurring expenses as it scales its operations and begins to generate revenue. While the Company intends to fund future operations using available capacity under its LOC (as defined in Note 6) and projected cash flows from operations, the absence of revenue to date raises substantial doubt about its ability to continue as a going concern.

Management’s plans to address this uncertainty include reducing expenditures and seeking additional financing through debt, equity, or a combination of both. However, there is no assurance that such funding will be available on acceptable terms, or at all.

Accordingly, management has determined that the Company does not have sufficient liquidity to meet its anticipated obligations over the next year from the date of issuance of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q do not include any adjustments that might result from the outcome of this uncertainty.

Risks and Uncertainties

Various macroeconomic, geopolitical and regulatory uncertainties and challenges pose risks to economic conditions in the U.S. and globally, including, among others, any resurgence in inflation; supply chain interruptions; increased cyberattacks against U.S. companies; changes to trade and tariff, immigration, energy and other policies resulting from the new U.S. administration; changes in interest rate policies; the Russia-Ukraine war; conflicts in the Middle East including the escalation of the Israel-Hamas conflict and continuing tensions between Israel and the U.S. with Iran; and economic conditions and tensions involving China.

Any of the above mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions, and subsequent sanctions or related actions, instability, volatility or lack of liquidity in the financial markets, could adversely affect the Company’s business, financial and operating results.

Note 2 — Summary of Significant Accounting Policies

Basis of Consolidation and Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Rainwater Acquisition Corp (f.k.a Merger Sub 1) and RWT. All significant intercompany accounts and transactions have been eliminated.

The unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Certain disclosures normally included in financial statements have been condensed or omitted from these unaudited condensed consolidated financial statements as they are not required for interim financial statements under GAAP and the rules of the SEC. Accordingly, these unaudited condensed consolidated financial statements do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation of the financial position, operating results and cash flows for the periods presented have been included. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report Form 10-K as of December 31, 2024, as filed with the SEC on April 16, 2025, which contains the Company’s audited consolidated financial statements and notes thereto.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities at the date of purchase of three and six months or less to be cash equivalents. Cash and cash equivalents are stated at fair value and may include money market funds, U.S. Treasury and U.S. government-sponsored agency securities, corporate debt, commercial paper, and certificates of deposit. The Company hadno cash equivalents as of June 30, 2025 and December 31, 2024.

Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying consolidated balance sheets, either because of the short-term nature of the instruments or because the instrument is recognized at fair value.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The assessment considers whether the financial instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the financial instruments meet all of the requirements for equity classification under ASC 815, including whether the financial instruments are indexed to the Company’s own ordinary shares, among other conditions for equity classification.

Foreign Currency Translation and Transactions

The U.S. dollar is the Company’s functional currency. Transactions denominated in currency other than the Company’s functional currency are recorded upon initial recognition at the exchange rate on the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured at each reporting date into the foreign currency at the exchange rate on that date. Exchange rate differences, other than those accounted for as hedging transactions, are recognized as foreign currency transaction gain or loss included in the Company’s statements of operations within the general and administrative expenses.

During the three and six months ended June 30, 2025 and 2024, the only foreign currency transaction the Company incurred was the amount paid to its senior technology advisor in Australian Dollars. The amount of these foreign currency payments was translated into U.S. dollars.

Equipment and Construction In-Process Equipment

The Company capitalizes its cost to build its rainfall ionization equipment (the “Equipment”), including materials and allocated labor costs. Upon the completion of building the Equipment, the Company transferred its capitalized cost from Construction in-process to Equipment. In July 2024, the Company completed its building process for its two initial units and transferred those into Equipment. As soon as the Equipment is placed in service upon agreement with the customers, the Company will begin to depreciate those assets on a straight-line basis over the estimated useful lives of the assets, generally 10 to 15 years. At the time of retirement or other disposition of the Equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. As of June 30, 2025, no Equipment has been placed in service.

Equipment as of June 30, 2025 and December 31, 2024 was comprised of the following:

Intangible Assets

Recognized intangible assets have finite lives and include acquired licenses for market-ready technology and designs of weather modification and rainfall ionization equipment. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

Intangible assets with finite lives are amortized using the straight-line method over the estimated useful economic life. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statements of operations and in the expense category that is consistent with the function of the intangible assets.

Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. The Company assesses the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows. If the sum of expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value of the asset. Fair value of these assets may be determined by a variety of methodologies, including discounted cash flow models. As of June 30, 2025 and December 31, 2024, the Company did not have any intangible assets with indefinite useful lives.

Stock Compensation

The Company’s policy is to account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a stock-based award is subject to performance conditions, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. Forfeitures are recognized as incurred.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited condensed consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2025 and December 31, 2024, the Company had approximately $1.3 million and $824,000, respectively, in deferred tax assets.

ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There wereno unrecognized tax benefits as of June 30, 2025 and December 31, 2024. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June 30, 2025 and December 31, 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major tax authorities since inception.

Net Loss Per Common Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including warrants, and stock options, to the extent dilutive. Stock options and warrants with exercise prices greater than the average market price of the Company’s common stock for the period are excluded from the calculation of diluted net income (loss) per share as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2025 and 2024, due to a net loss, all potential shares of common stock were not included in the calculation of dilutive net loss per share as their effect would have been anti-dilutive. As a result, diluted net loss per share is the same as basic net loss per share for the periods presented.

The net loss per share presented in the unaudited condensed consolidated statements of operations is based on the following for the three and six months ended June 30, 2025 and 2024:

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures. The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as an expansion of other income tax disclosures. The ASU is effective on a prospective basis for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

Issued in November 2024, ASU 2024-03, Disaggregation of income Statement Expenses (Subtopic 220-40), requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. While early adoption is permitted, the Company does not plan to adopt this standard early. This ASU will likely result in additional disclosures being included in the Company’s consolidated financial statements once adopted. The Company is currently evaluating the provisions of this ASU will have on its consolidated financial statements.

Note 3 — Business Combination Updates

PIPE Subscriptions Receivable

On February 6, 2025, the Holdco received $650,000 of the PIPE investment subscription receivable jn connection with the Business Combination as described in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2025.

Forward Purchase Agreement with Meteora

Also in connection with the Business Combination, on December 30, 2024, Holdco entered into a forward purchase agreement (the “Forward Purchase Agreement”) with Meteora Capital Partners, LP and affiliated funds (“Meteora”) for an OTC equity prepaid forward transaction as described in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2025.

The Company’s management determined that the prepaid Forward Purchase Agreement is a hybrid instrument with an embedded derivative (forward purchase contract), which meets the definition of a derivative and does not meet the criteria for the derivative accounting scope exception in ASC 815. As such, the embedded derivative is recognized initially and subsequently at fair value, with changes in fair value reported in earnings in accordance with ASC 815. Because the bifurcated embedded derivative is a forward contract, it must have an initial fair value ofzero. As a result, the prepayment amount was allocated entirely to the host contract, which represents a receivable classified as contra-equity. Any shares issued under the Forward Purchase Agreement were accounted for and classified as issued and outstanding for accounting purposes.

Until the earlier of 1) the maturity date, and 2) the date that gross proceeds from the sale of the shares by Meteora equal 100% of the “Prepayment Shortfall”, the Company recognizes a liability for the Prepayment Shortfall at fair value, with subsequent changes in fair value recognized in the Company’s unaudited condensed consolidated statements of operations each reporting period until the Maturity Date. As of June 30, 2025 and December 31, 2024, the value of the shortfall payment liability at its maximum value of approximately $21,000 remained unchanged.

Note 4 — Intangible Assets

Patent License

On November 21, 2022, the Company entered into a license agreement with Dr. Theodore Anderson, a plasma physicist, whereby the Company was granted an exclusive, worldwide license under certain of Dr. Anderson’s patents. The consideration paid for the license of $33,000, which was fully paid in November of 2022, was recorded as a finite-lived intangible asset.

Consulting Agreement for Rainfall Ionization Equipment

The Company entered into a consulting agreement to engage its senior technology advisor (“Technical Advisor”) in 2022, pursuant to which the Company agreed to pay the Technical Advisor a one-time fee upon execution of the agreement and a consulting fee of AUD 250,000 per year (equivalent to approximately $170,000 as of the effective date). In February, the agreement was amended to increase the annual consulting fee to $186,000, and in June 2025, it was further increased to $252,000 in exchange for the consultant assuming additional role and responsibilities. The agreement also provides for success fees payable upon the achievement of specified sales and development milestones, which remain unchanged.

In connection with the consulting agreement, the Company also obtained from the Technical Advisor an irrevocable, perpetual, non-exclusive license under certain engineering designs in connection with rainfall ionization equipment and systems. The Company fully paid the license amount of $83,750 in June 2023.

Intangible Assets

Intangible assets as of June 30, 2025 and December 31, 2024 are composed of licenses under certain patents and designs for weather modification and rainfall ionization equipment to Dr. Anderson and the Technical Advisor as discussed above.

Management anticipates that equipment utilizing certain of these patents and designs will become operational and placed in service within 2025. The Company amortizes those assets on a straight-line basis over the estimated useful lives of the assets under full-month convention. The Company plans to continually adapt to incorporate new technologies and to expand into markets that may be created by new technologies for rainfall generation. As a result, the Company anticipates that the licensed patents and designs will have aten-year useful life before the Company transitions and adopts new technologies.

Intangible assets as of June 30, 2025 and December 31, 2024 were comprised of the following:

The Company incurred approximately $3,000 and $6,000 in amortization expenses for each of the three and six months ended June 30, 2025 and 2024, which is included in the accompanying unaudited condensed consolidated statements of operations. The intangible assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. For the three and six months ended June 30, 2025 and 2024, there wereno impairment charges associated with the Company’s intangible assets.

Note 5 — Related Party Transactions

Note Payable and Line of Credit from Related Parties

On February 2, 2023, RWT issued a promissory note (the “Note”) to its former CEO, Mr. You and Mr. de Masi for an aggregate amount of $600,000. The Note has an annual interest rate of 5% and is currently due on demand.

On December 30, 2024, Holdco entered into a loan agreement (the “Loan Agreement”) with RHY Management LLC (“RHY”), an affiliate of Harry You, Holdco’s Chairman, pursuant to which RHY agreed to issue a line of credit (the “LOC”) to Holdco for up to $7 million, in addition to the Rollover amount described below (such amounts borrowed under the LOC, together with the Rollover, the “Loan”). The Loan bears interest at the greater of 5% per annum or the applicable IRS short-term rate in the month of each drawdown (“Interest Rate”), payable quarterly in arrears. If a quarterly payment is missed, the loan balance increases by an amount equal to the principal multiplied by the Default Rate (as defined below). If an event of default has occurred and is continuing, then upon written notice by RHY to Holdco, the outstanding principal balance and any unpaid accrued interest will accrue interest at 2% above the Interest Rate (the “Default Rate”).

Prior to closing of the Business Combination, the outstanding amount that Coliseum and RWT owed to Mr. You and his affiliates was approximately $3.1 million. All of these outstanding amounts (the “Rollover”) were assigned to and assumed by Holdco and are treated for all purposes as Loans outstanding under the Loan Agreement. The Rollover amount does not reduce the $7 million funding available to the Company under the LOC. As a result, as of December 31, 2024, the Company had approximately $3.1 million outstanding under the LOC, comprised solely of the Rollover amount.

As of June 30, 2025, the Company had drawn approximately $2.4 million under the LOC, bringing the total outstanding balance under the Loan Agreement to approximately $5.5 million (including the $3.1 million Rollover). Subsequent to June 30, 2025, the Company drew an additional amount of approximately $354,000 under the LOC.

As of June 30, 2025 and December 31, 2024, the Company had an outstanding accrued interest balance in connection with both the Note and the LOC of approximately $118,000 and $38,000, respectively.

Employment Agreement

Effective January 2, 2025, RWT entered into a binding offer letter (the “Offer Letter”), which was later amended on June 27, 2025, with its new CEO, Mr. Seidl. Pursuant the amended Offer Letter, Holdco agreed to pay to the CEO (i) an annual salary of $500,000, (ii) an annual incentive bonus up to 200% of his base salary, subject to Board approval and (iii) a cash bonus of $5.82 million (the “Retention Bonus”) payable on the earlier of (x) December 31, 2028, (y) the date on which the Company terminates the CEO’s employment without cause, or (z) the date on which a change of control is consummated. The Company accrues the Retention Bonus over the period of service. As of June 30, 2025, the Company accrued approximately $14,000 of Retention Bonus in accrued expenses to related party in the accompanying unaudited condensed consolidated balance sheet.

In addition, subject to approval by the Board and the Compensation Committee, Mr. Seidl is also entitled to equity awards under the Company’s equity incentive plan. As of June 30, 2025, no equity awards have been granted.

Board of Directors Agreement

In connection with their appointments to the Board, Mr. Reardon and Mr. Peperzak each entered into Director Agreements which are the form of agreement adopted by the Board in April 2025 to govern the terms of service and compensation of the Company’s non-employee directors (the “Director Agreements”). Additionally, effective as of April 4, 2025, the Company entered into Director Agreements with Lyman Dickerson, Alexandra Steele, and Christopher Riley, each non-employee members of the Board. Pursuant to the terms of the Director Agreements, the Company agreed to pay to each Board member (i) subject to approval by the Board and compensation committee of the Board (the “Compensation Committee”), a cash payment of $12,500 promptly following attendance at each quarterly Board meeting, for a total annual cash compensation of $50,000; and (ii) subject to approval by the Board and the Compensation Committee, a grant of restricted stock, with the number of shares and terms to be determined by the Board. The Company recognized an aggregate of $100,000 in connection with such agreement during the three and six months ended June 30, 2025 within general and administrative expenses in the accompanying unaudited condensed statements of operations. As of June 30, 2025, there has been no grants of restricted stock.

Termination Letter

On January 29, 2025, Holdco, RWT and Christopher Riley entered into a letter agreement whereby Mr. Riley resigned as Co-Chief Executive Officer of the Company and RWT effective as of January 30, 2025 (the “Termination Letter”). Mr. Riley remains as a member of the Board. The Company appointed Randall Seidl to serve as Co-Chief Executive Officer effective as of January 2, 2025 as discussed above. Following the resignation of Mr. Riley, Mr. Seidl is the Company’s sole Chief Executive Officer.

Pursuant to the Termination Letter, in lieu of all other compensation and payments of any kind due and payable to Mr. Riley, the Company agreed to pay Mr. Riley an aggregate of $124,500, payable in 18 monthly installments beginning in February 2025 in consideration for his past services. The Company paid approximately $28,000 during the three and six months ended June 30, 2025. As of June 30, 2025, the remaining amount of approximately $97,000 in connection with such agreement was included in accrued expenses in the accompanying unaudited condensed balance sheet. Additionally, conditioned on approval by the Compensation Committee of the Board, the Termination Letter provides that Mr. Riley will be granted 10,000 shares of Class A Common Stock of the Company vestingone year from the date of grant. As of June 30, 2025, the stock has not been granted.

Note 6 — Warrants

As of June 30, 2025 and December 31, 2024, the Company has 5,000,000 warrants to purchase Holdco Class A Common Stock (“Warrants”) outstanding, which was the rollover of the 5,000,000 Coliseum Public Warrants upon closing of the Business Combination. The Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Warrants. The Warrants became exercisable on January 31, 2025 and will expire on December 31, 2029 at 5:00 p.m., New York City time, or earlier upon liquidation. Each Warrant entitles the holder thereof to purchaseone share of Class A Common Stock at an initial exercise price of $11.50 per share and exercisable on a cashless basis under certain circumstances specified in the warrant agreement.

The Warrants are derivative warrant liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The warrant liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities are adjusted to current fair value, with the change in fair value recognized in the Company’s statements of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification. Refer to Note 7 for additional information on the fair value measurements of these warrants.

Note 7 — Fair Value Measurements

Financial liabilities measured at fair value during the periods on a recurring basis consisted of the following as of June 30, 2025 and December 31, 2024:

June 30, 2025

December 31, 2024

The Warrants are listed on the Nasdaq Stock Market LLC under the ticker “RAINW”. As of June 30, 2025 and December 31, 2024, the fair value measurements for the Warrants were classified as Level 2 due to low trading volume.

During the three and six months ended June 30, 2025, there were no transfers between levels of the fair value hierarchy.

Note 8 — Stockholders’ Deficit

The Company is authorized to issue 30,000,000 shares of Holdco Class A Common Stock, par value $0.0001,1,000,000 shares of Holdco Class B Common Stock, par value $0.0001, and 1,000,000 shares of preferred stock, par value $0.0001.

Holdco Class A Common Stock entitles the holders thereof toone vote per share on all matters on which the shares of Holdco Class A Common Stock is entitled to vote, and Holdco Class B Common Stock entitles the holders thereof tofifteen votes per share on all matters on which the shares of Holdco Class B Common Stock are entitled to vote. Additionally, for so long as the RWT Founders (Paul T. Dacier, Harry L. You, and Niccolo de Masi, or their affiliates) hold at least 20% of the number of shares of Holdco Class B Common Stock collectively held by them as of the Closing, the RWT Founders have rights that are different from unaffiliated shareholders, including the right to fill vacancies on the Holdco Board and to call special meetings of shareholders. The Holdco A&R Articles permits action by written consent of the shareholders and requires that amendments to the Holdco A&R Articles be approved by a majority of the shares of Holdco Common Stock entitled to vote in lieu of two-thirds of the shares of Holdco Common Stock entitled to vote on the matter after the date on which the issued and outstanding Class B Common Stock represents less than 50% of the total voting power of the then outstanding shares of capital stock entitled to vote.

The dual class structure will terminate on December 31, 2029, or earlier (i) at the option of the holder at any time, (ii) automatically on the date on which the RWT Founders or their Permitted Transferees collectively own twenty percent (20%) or less of the number of shares of Holdco Class B Common Stock collectively held by such persons or their Permitted Transferees immediately after the completion of the Business Combination, (iii) automatically upon the occurrence of a transfer of Holdco Class B Common Stock that is not a Permitted Transfer, and (iv) automatically on the date specified by the affirmative vote of the holders of Holdco Class B Common Stock representing not less than two-thirds (2∕3) of the voting power of the Holdco Class B Common Stock. The Holdco Class A Common Stock and the Holdco Class B Common Stock have identical economic rights, including dividend and liquidation rights.

Holdco Preferred Stock

As of June 30, 2025 and December 31, 2024, there wasno preferred shares outstanding, as retroactively restated to reflect the Business Combination.

Holdco Class A Common Stock

As of June 30, 2025 and December 31, 2024, the Company had an aggregate of 7,528,761 shares of Class A Common Stock issued and outstanding as a result of the conversion and issuance of shares in connection with the closing of the Business Combination as discussed in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2025.

Holdco Class B Common Stock

As of June 30, 2025 and December 31, 2024, the Company had an aggregate of 57,752 shares of Class B Common Stock issued and outstanding as a result of the conversion of shares in connection with the closing of the Business Combination as discussed in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2025.

Stock Options

On August 23, 2024, the Company granted 1,433,892 and 716,946 options, as retroactively restated to reflect the Business Combination, to purchase RWT’s Class A common stock to Harry You and Niccolo de Masi, respectively. The options expireten years from the date of grant, had an exercise price of $2.06 and were fully vested upon the grant date. As of June 30, 2025 and December 31, 2024, the Company had an aggregate of 2,150,838 options issued and outstanding.

Note 9 — Segment Information

ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.

The Company operates and manages the business asone reportable and operating segment, which is the business of developing, manufacturing and commercializing ionization rainfall generation technology. The Company’s Chief Executive Officer has been identified as the chief operating decision maker (“CODM”), who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only hasone operating segment.

When evaluating the Company’s performance and making key decisions regarding resource allocation the CODM reviews several key metrics, which include the following:

As the Company has not earned any revenue, the key measures of segment profit or loss reviewed by the Company’s CODM are general and administrative expenses to monitor, manage and forecast cash to ensure enough capital is available for working capital needs. The CODM also reviews general and administrative costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.

Note 10 — Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through August 14, 2025, the date at which the unaudited condensed consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events that required adjustment or disclosure in the unaudited condensed consolidated financial statements, except as noted below.

Subsequent to June 30, 2025, the Company drew an additional amount of approximately $354,000 under the LOC.